Generating the Report from different credit bureaus

In India, there are three major credit bureaus – Experian, TransUnion, and Equifax. These bureaus are competing with each other to collect, update, and store credit histories of most Indian customers. Although most of the information gathered by these bureaus is similar, there are some differences which you must know. For instance, one bureau may have some information that is not collected by the other two which will cause a difference in your score from all three bureaus. It is also possible that one bureau may use a different scoring scale for a credit score. It will ultimately affect your score and the range it belongs to. Therefore it is imperative that you know about the differences between these bureaus. You gain knowledge about how it can affect your credit report from each bureau. 

One of the benefits of learning about how credit bureaus works can help you better understand your credit as well. Most times, bureaus are all considered as one; however, they are separate companies competing for consumer data in the market. Considering the importance of credit score and how much bearing they have on your financial fitness and the next new credit you go out to take, you shouldn’t miss on any chance to improve your credit score. Having a credit report is very crucial. 

 What do credit bureaus do?

The credit bureaus use the information gathered about you from various banks and NBFCs to generate your credit report and calculate your credit score. This credit report is used by lenders at the time on making the decision of whether to give you credit or not. As per the law, credit bureaus are mandated to provide you with a copy of your credit report once a year at no cost. 

Apart from collecting information from creditors like banks and NBFCs, the bureaus also share information or buy them from each other. 

Why do you have different scores from different bureaus?

There are various reasons for the difference in credit scores from different bureaus. It could be due to a reason that some lenders report only to one or two specific bureaus. There is no interaction between the credit bureaus regarding accounts and due dates. Another reason could be that one bureau rates an element differently than another one. For example, a bureau can weigh a factor element as 25% while another may weigh as 30%, this would result in a slight difference between the credit score. 

Request your credit report when there is a huge difference in score from different bureaus to understand the discrepancy, slight variations are not alarming. 

Scoring Model

The range of credit score for each bureau may vary too, and so does the weight is given to each scoring factory by the bureau. All three credit bureaus use the FICO scoring model but have different weights for the scoring factors. 

1. Credit Utilization: Experian gives credit utilization a weight of 30%, while TransUnion and Equifax give it 20% and 30% respectively. 

2. Payment History: TransUnion gives 40% weight to payment history while Equifax and Experian give 35% each. 

3. Types of Credit: TransUnion gives 11% weight to different types of credit an individual has used while Equifax and Experian give 10% each.   

4. Credit Age: TransUnion gives 21% weight to credit age while Experian and Equifax give 15% each.

5. Number of Inquiries: The weight of 5% is given by TransUnion to the number of inquiries while Experian and Equifax give 10% each. 

These bureaus have similar functions. They are actually competitors fighting for the business of lenders and financial institutions to gather information and use that information to calculate the credit score. 

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