Regarding credit scores in India, two names primarily come up: Experian and CIBIL. The former is a credit score bureau, just like the latter. However, there lies a vast difference between them. This forms essential information to be known by any person trying to maintain or manage his credit health. Herein, we discuss the differences between Experian and CIBIL and why you need a high credit score.
What is an Experian Credit Score?
Experian is one of the largest credit bureaus worldwide, with some operations across countries, including India. Experian credit score generally falls between 300 and 900, reflecting your creditworthiness. It is gauged through your credit history, which basically includes your behavior in making repayments, how you use credit, and the types of credit accounts you have.
The Experian credit score is internationally recognized and adopted by most Indian financiers to check the creditworthiness of their borrowers. The better your score with Experian, the better your chance of availing of loans or credit cards at better terms.
What is CIBIL?
CIBIL stands for Credit Information Bureau (India) Limited, the first credit information company in India. Like Experian, it gives a score between 300 and 900. Lenders also use the CIBIL score to assess a borrower’s creditworthiness.
It records the credit history of millions of people and companies. The CIBIL score captures repayment patterns, outstanding debt, and credit inquiries in one’s case history. The higher the CIBIL score, the better the state of credit health. Borrowers easily access loans or other credit at the cheapest possible interest rates.
Comparison: Experian Credit Score vs. CIBIL Score
When comparing Experian credit score vs. CIBIL score, it’s essential to understand that both credit scores serve the same purpose but are calculated differently. Here’s a table that outlines the key differences:
| Feature | Experian | CIBIL |
| Score Range | 300-900 | 300-900 |
| Algorithm | Proprietary algorithm used by Experian | Proprietary algorithm used by CIBIL |
| Recognition | Globally recognized credit bureau | India’s first and most popular credit bureau |
| Credit Report | Provides detailed credit report | Provides detailed credit report |
| Credit Utilization Impact | Varies based on the credit type and history | Strongly impacted by the amount of credit utilized |
Both Experian and CIBIL use proprietary algorithms to calculate credit scores, which means the scores can vary slightly even if the credit data is the same. However, both scores are equally valid and used by lenders to assess creditworthiness.
Critical Differences between Experian and CIBIL.
Though the Experian and CIBIL scores may seem similar to a layperson, they are not. Some of the critical differences between Experian and CIBIL are listed out below:
Although both bureaus source data from different financial institutions, their points and weights could vary. Hence, your score may differ between CIBIL and Experian.
The format of the credit report might be slightly different between Experian and CIBIL, as they display it in a different form, though both will reflect almost similar fields like credit history, repayment behavior, and credit utilization.
Although CIBIL has seen more usage in India since its founding, Experian is still fast catching up, especially with the global lenders that are also in business in India.
Credit inquiries are duly reported in Experian and CIBIL. However, the degree of taking down the score may differ slightly between the two bureaus. Too many credit inquiries will bring your score down. Too many inquiries pull down your credit score.
Knowing these differences is key to managing anyone’s credit health. Understanding how each bureau scores can help you make informed choices and take further steps toward a good score.
General Importance of a High Experian Score
Be it your Experian credit score or CIBIL score, the fact remains that a high credit score is essential to have. A high Experian credit score would enhance your chances of getting approval for loans and credit cards at interest rates that are per your preference. There are also chances for higher credit limits and better loan terms.
A very high Experian score shows the lender responsible credit behavior and thus lower risk, which is something that can get your loan approved faster than most applications and save you with lower interest charges.
How to Increase Your Experian Credit Score
Improving your Experian score requires responsible time and credit management. In the following, see some of the tips that can be of help in bumping your scores:
Paying your bills on time is the most critical factor in ensuring a good credit rating. Make sure you pay off credit card bills, loan EMIs, etc., promptly every month.
Maintain credit utilization under 30%. That means using less than 30% of the amount available in your credit facility. Using less of your credit facility can help your score.
When you apply for a new card or loan, your credit report is filed for a hard inquiry. Too many inquiries, mainly if they are frequent, could reduce the score, so do this only when necessary.
Check your credit report regularly for errors and other credit score issues. Use facilities to access your credit report from Experian or CIBIL and get your score checked occasionally.
Following these hints will increase one’s credit scores over time, making credit more available when needed.
How InstaMoney can help in low credit score loans
Availing personal loans with low CIBIL or Experian score can be cumbersome. InstaMoney deeply understands one fact: everyone’s financial conditions are different. It offers tailor-made loan solutions for such low credit scoring customer segments, and hence, it may be able to fulfill their needs while working on their credit health.
Our loan products have flexible terms, are cost-competitive in interest rates, and are accommodative of easy repayments. InstaMoney can help you finance a personal, home, or auto loan without regard for your credit score.
Conclusion
In the debate of Experian vs CIBIL, it’s clear that both credit scores play a crucial role in your financial life. Understanding the differences can help you manage your credit health more effectively. Whether you’re focusing on your Experian score or CIBIL score, maintaining a high credit score should be a priority. You can improve your credit score and enjoy its financial benefits with the right strategies and patience.
FAQs
1. Why are my Experian and CIBIL scores different?
The difference arises because each bureau uses a different algorithm and data set to calculate your score.
2. Which score is more important, Experian or CIBIL?
Both scores are essential, and lenders may use either, depending on their preference.
3. How often should I check my credit score?
It’s advisable to check your credit score at least once every six months to monitor your credit health.
4. Can I improve my credit score quickly?
Improving your credit score takes time. Consistent, responsible credit behavior is critical to boosting your score.
