Published on Nov 28, 2022Updated on Jul 17, 2023
There are various aspects of taking up external financial support from a lending institution. With borrowing comes different terminologies relating to repayment, legal orders, interest rate, eligibility, etc. The most commonly heard eligibility criterion entails a strong credit score. Under the Government of India, there are 4 bureaus that give out credit scores. The 4 types of credit scores are Experian, Equifax, CIBIL, and Equifax.
It is vital that you know the difference between CIBIL and Experian scores so that you can know which score to present in front of your lending institution for your loan application. The Experian or credit score can make a huge difference in your eligibility and loan approval. Hence, this article talks about Experian vs CIBIL score for your better understanding.
According to the Credit Information Companies (Regulation) Act of 2005, the TransUnion CIBIL bureau, which stands for Credit Information Bureau (India) Limited, has introduced the most commonly used standard for measuring an individual’s creditworthiness.
The CIBIL score depends upon a number of factors like income, current debt, credit type, tenure of loan, previous defaults, etc., to determine the repayment capacity of the candidate. The CIBIL score range is from 300 to 900. The composition is as follows:
CIBIL score = Credit exposure (25%) + Credit type with tenure (25%) + History of repayment (30%) + Miscellaneous factors (20%)
A good CIBIL score is that which ranges from 750 to 900. At this point, the chances of your lending institution approving of your online personal loan application are high.
As per the standards of the Securities and Exchange Board of India (SEBI), Experian is a well-established Credit Information Company which gives out a report reflecting your financial position through parameters like your record of loans, credit history, current credit information, account balance, transactions, etc. It is according to this final score that your lending firm accepts or rejects your loan application. The Experian credit score ranges from 300 to 850 with the higher numbers indicating better repayment capabilities.
The difference between CIBIL and Experian scores is apparent when we look at their considerations with lending companies.
|CIBIL Score||Experian Score|
|Most lending institutions require the CIBIL score for evaluating the candidate’s application.||Though the Experian score is accurate and does determine the individual’s loan repayment capacity, it is not very commonly mandated.|
|This comes under the Reserve Bank Of India.||This comes out as a result of the merger between the CCN Group and TRW Information Systems & Services.|
|It holds a higher weightage because of its Indian origin.||It holds significantly low weightage.|
|Domestic money lenders give CIBIL scores a high priority when it comes to giving out business loans to various applicants. This means that a good CIBIL score might have a better stance than a high Experian score.||The Experian score is not disregarded by lenders, but it has become a standard practice to present the CIBIL score instead of this score when applying for business loans.|
|The CIBIL bureau got its CIC license in 2000.||The Experian bureau got its CIC license in 2010.|
|The calculation model is called Empirica.||The calculation model is called FICO.|
Must Read: How is Your CIBIL Score Calculated?
A credit score is of utmost importance while applying for an online personal loan. If you are turning to a non-banking financial company for a loan, then you must include your CIBIL score in your set of personal loan documents. With a score of more than 750, your chances of getting a loan approval are high, but this will also depend on your loan eligibility. To check your eligibility, you can use the online personal loan eligibility calculator.
If you meet all the personal loan eligibility, you can apply for a personal loan of up to INR 25 lakhs* with low interest rates (according to credit score) and long repayment tenures. The best part about taking up a personal loan is that you can use the funds for any application that you have without worrying about end-use restrictions. Keep in mind that you must ensure you pay back your loan without default so that your CIBIL score remains intact and you can further apply for loans based on it. If your current score isn’t up to the mark, you can work on improving it.
The difference between CIBIL and Experian scores is evident on grounds of reliability and commonality. However, you must be prepared to present that score which your lending institute asks for. It is of utmost importance that you maintain your financial health and debt history by repaying all your loans within time.
If you’re looking to apply for an instant* online personal loan, then you should check out SMFG India Credit. Its personal loan interest rates starting from only 11.99%* per annum and high tenures going up to 60 months can ensure that you get the best financial support for your dreams. Check out our EMI calculator to understand more about different loan structures with repayments and apply now!
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*Terms and Conditions apply. Loans are disbursed at the discretion of SMFG India Credit.