What are Credit Information Companies (CIC’s)?
CIC or Credit Information Company is a free outsider establishment that gathers money related information in regards to advances, Mastercards and more about people and offers it with its individuals. Banks, Non-Banking Financial organizations are generally the clients of Credit Information Companies. The Credit Card Company gathers money related data about every one of these people and structures a credit report in view of their monetary history. This credit report assumes an essential part as it enables banks and other money related foundations to decide the financial soundness of an individual applying for an advance or Visa with them.
Credit Information Companies Regulation Act (CIC Act)
Credit Information Companies in India are authorized by the Reserve Bank of India and administered by the Credit Information Companies Regulation Act, 2005 and different guidelines and controls issued by the Reserve Bank of India. The CIC Act, 2005 is an enactment that is authorized by the Government of India, so as to control the activities of the Credit Card Companies in India. Following the CIC Act, 2005, the RBI and the Government of India sanctioned the CIC Act, 2006.
List of Credit Information Companies In India
There are exactly four well known CICs in India as of now. Given below is a list of CICs in India:
- CIBIL – The Credit Information Bureau Limited or CIBIL was founded in the year 2000. It is also the first Credit Information Company of India.CIBIL boasts of over 900 strong member base including public and private sector banks, non-banking financial institutions and housing finance companies. CIBIL collects commercial and consumer finance related data and forms a credit report. The company also issues a score derived from this data known as CIBIL score. The CIBIL score plays a very important role when it comes to the approval of loan and credit cards. Any individual can purchase a copy of their CIBIL report for a cost of Rs.550 and have access to it within 3 days.
- Equifax – Equifax is a CIC that was founded in the year 1899 in Atlanta. It is one of the oldest CIC as of now. Equifax got its ‘Certificate of Registration’ in India in the year 2010 by the Reserve Bank of India. The company has a separate bureau dedicated to address the growing lending and regulatory needs of the Microfinance Institutions. The company charges a fee of Rs.138 for a basic credit report and a fee of Rs.400 for credit score.
- Experian – Experian Credit Information Company was established as a joint venture with several banks and financial institutions in India in the year in 2006. It was named as one of the ‘World’s most innovative companies’ by Forbes magazine in the year 2014. Experian prepares credit reports of individuals based on the information provided by banks and other financial institutions about the financial history of the individual. The company charges a fee of Rs.399 for a credit report and credit score while a credit report will cost just Rs.138.
- High Mark Credit Information Services – This Company not only provides credit reports to customers, but also caters to borrower segments such as SME, commercial borrowers and retail borrowers. It was established in 2005 in Mumbai. The company charges a nominal fee for a credit report.
How do Credit Information Companies’s work
Credit Information Companies go along open information, credit exchanges and installment histories of people and organizations. The information is gathered from different valid sources and the organizations shape a credit report in view of the gathered information. The credit organizations likewise make a score in view of the credit report of an individual or an association. Generally FICO rating ranges between 350 to 850, anything over 750 is considered as a decent score. The credit report and credit score plays a vital lead in a person’s monetary adventure as banks allude to this report and score to choose the financial soundness of a person before giving an advance or Mastercard
Rules and regulations for CIC’s
The actions of Credit Information Companies is regulated by the Credit Information Companies Regulation Act, 2005, enacted by the Government of India. Following the CIC Act of 2005, the RBI and the Government of India followed up with the Credit Information Companies, Regulations and Rules Act, 2006.
According to the Act, only certain entities are allowed to be members of the Credit Information Companies. Given below is a list of entities that can be members of CICs.
- Credit Institutions under Section 2(f) of CIC Act.
- Credit information companies under section 2(e) of the CIC Act.
A CIC, a credit institution or any authorised individual can request for a credit report anytime. A CIC will adapt to a format approved by RBI during such instances and furnish the requested information within a given time.
If there is any dispute between the CIC and its member related to credit information, the dispute shall be settled by conciliation under the as provided in the Arbitration and Conciliation Act, 1996.
Who has access to these reports?
Given below is a list of entities that can have access to a credit report from a Credit Information Company:
- Credit grantors
- Insurance companies
- Collection agencies
- Employers with the permission of the individual