Experian Credit Score - Understand the Working and Importance of Experian Credit Score

Credit bureaus play a crucial role in determining an individual’s eligibility for various loan products. The four primary credit bureaus in India are TransUnion CIBIL, Experian, Equifax, and CRIF High Mark.

Among these, CIBIL is the most widely recognised. However, credit scores from the other bureaus are equally valid and are often used by financial institutions to assess loan applications.

While each credit bureau may use slightly different methods to calculate credit scores, they generally consider factors such as credit history, outstanding debts, payment records, and the number of credit enquiries made.

This article focuses on the Experian credit score, its significance, and how you can access and understand it to improve your financial standing.

What Is Experian Credit Score?

An Experian credit score is a numerical representation of your creditworthiness, used by lenders to assess your ability to repay debts. Experian is a credit bureau registered with the Reserve Bank of India (RBI) since 2010, and its database holds 430 million loan records.

So, how does Experian credit score work? Experian employs the V3 scoring system, an enhancement over the previous V2 model, incorporating recent data and market trends to provide a more accurate assessment of credit risk. Notably, V3 scores may be approximately 50 points lower than V2 scores due to the updated methodology. The Experian credit score ranges from 300 to 900, with higher scores indicating better creditworthiness.

What Is the Importance of Experian Credit Score and Report?

Understanding your Experian credit score can give you a better idea of the likelihood of loan approval and whether you need to improve your score before applying for one. Some of the key benefits of checking your Experian credit report regularly include:

• Identifying discrepancies and correcting errors before applying for new credit.
• Gaining access to exclusive financial products and services.
• Getting insights for making informed decisions to mitigate financial risks.
• Simplifying your decision-making process when applying for loans.
• Protecting yourself from fraud, identity theft, and misrepresentation through regular monitoring.
• Employers and landlords may also check your Experian credit score. Companies, especially those in finance or insurance, often use credit scores to assess an individual’s reliability.

How to Check Your Experian Credit Score?

The easiest way to access your score is by visiting Experian’s website, where you can sign up, verify your identity, and access your score instantly.  Here’s how to generate an Experian credit report:

1. Registration: Visit Experian's official website and navigate to the 'Free Credit Score' section. As a first-time user, you'll need to register by providing your mobile number linked to your credit account and verifying it with an OTP.
2. Personal Information: Complete the registration by entering the requested information such as your full name and email address.
3. Verification: After submitting the form, Experian will authenticate your details. Once verified, your credit report will be available to be viewed and downloaded.

For a detailed guide, refer to Experian's official instructions.

How Is Experian Credit Report Generated?

Experian generates your credit report by collecting and analysing data from a wide range of financial institutions, including banks and non-banking financial companies (NBFCs). The report considers several factors, including:

• Details about your credit cards, loans, mortgages, and other credit facilities.
• The total amount of debt you owe, including any record of bankruptcies or liens.
• Records of your payments, highlighting any missed or late payments.
• The number of credit enquiries or applications you've made recently.
• Details of any debts that have been sent to collection agencies.

What Does an Experian Credit Report Consist of?

An Experian credit report consists of several key sections, each crucial for understanding your creditworthiness. These include:

• Personal Information: Details such as your name, address, and employment data.
• Credit Accounts: A list of your active credit accounts, including balances and payment histories.
• Current Balance Summary: Information about your current balances, settled amounts, and any unsettled debts.
• Credit Enquiries: Differentiates between soft and hard enquiries, with hard enquiries potentially affecting your score.
• Non-Credit Summary: Information on non-credit enquiries made within 7, 30, 90, and 180 days.
• Negative Marks: Bankruptcies or liens that can lower your score.
• Experian Credit Score: A summary of your credit score as calculated by Experian India.

Bottom Line

A strong credit score is essential for maintaining good financial health. Regular monitoring helps you stay informed about your creditworthiness and take the necessary steps to improve it. Whether you're planning to apply for a loan or credit card, or simply want to maintain a strong financial profile, your credit score serves as a valuable indicator of your financial health. Make it a habit to check your credit score periodically and address any issues promptly.

At SMFG India Credit, you need a credit score of at least 750 to apply for a personal loan of up to INR 30 lakhs*. Apply online today to benefit from competitive interest rates starting from 13%* per annum.