Experian is one of the world’s foremost credit information services companies offering a wide range of business tools to their clients based all across the globe. Widely known to be among the planet’s most innovative companies according to Forbes magazine, the company is licensed by the Reserve Bank of India and assists clients by providing a wealth of analytical as well as data tools, which help them manage their businesses in a more efficient and effective manner. Experian is also the first credit information company to be licensed by Credit Information Companies (Regulation) Act 2005 (CICRA 2005) and currently operate two firms within India, namely:
- Experian Credit Information Company of India Private Ltd
- Experian Services India Private Ltd
Experian has tied up with more than 2,900 financial institutions, counting public sector banks, telecom companies, micro finance institutions as well as non-banking financial companies. The company, which is ISO 27000:2013 certified, provides its customers with credit information as per guidelines issued by the Credit Information Companies (Regulation) Act of 2005.
Features and Functions of Experian
In addition to business management tools, the firm also assists businesses in the following ways:
- Helps businesses zero in on offers relating to marketing
- Helps clients by managing their credit risk in a more efficient manner
- Helps businesses by automating their decision making
- Effectively helps clients in the prevention and circumvention of instances of fraud
- The firm also helps individuals by protecting them against identity misrepresentation and theft, ascertainment of their credit scores, and drawing up their credit reports.
Services Provided By Experian
Experian offers businesses and individual customers the following services:
Experian assists its customers by providing them with the following consumer based services:
- Regularly updating clients on a monthly basis with regards to their credit performances.
- Informing clients about the current status of their credit.
- Assisting clients in making smarter and sound financially related decisions for the future.
- Ensuring that their client’s credit is protected as time goes on.
- Helping clients to understand and analyse their credit reports.
- Ensuring that credit reports obtained by clients do not contain any errors.
- Providing quick and rapid resolutions should any inaccuracies or errors be found in the client's credit report.
Experian also provides special services to clientele who are members of the company. Some of their member related services are as follows:
- Assisting clients predict and forecast their credit risk.
- Providing clients with effective and efficient management regarding their credit risk.
- Helping clients lower their exposure to bad debts.
- Ensuring that clients are protected against the possibility of fraud.
- Providing assistance to clients with regards to optimisation, segmentation, custom scores and much more.
What is a credit report?
Experian makes credit information available to their clients by means of a credit report which is generated through the conversion of existing financial information such as loans, personal credit history, credit cards etc. into a set format. This is known as a credit score. Members provide this financial information, which is used to draw up a report that assesses the customer’s credit worthiness based on past financial history.
A credit report thus gives a lender an accurate snapshot of the borrower’s detailed financial position, allowing them to make informed decisions regarding the extending of credit to these borrowers.
How is a Credit Report Calculated?
An Experian report is calculated based ion certain factors and an Experian score is provided, which corresponds to the customer’s financial position.
An Experian score ranges between 300-900 points, with a higher score indicative of a more financially sound position.
This scale helps lenders to assess the risks associated with lending to a particular borrower and also determines if the borrower will be granted credit at all.
An Experian score is divided into certain categories, as under:
Very Low (ranging between 300-500)- this score indicates that the customer has a poor history of financial management, resulting out of bad debts, payment defaults and poor credit utilization patterns. A customer with such a score is a high risk and lenders will be wary of extending credit.
Low (ranging between 500-650)- this score indicates that the customer has a low score, with instances of payment defaults, unsecured loans, etc. A customer with a low credit score is liable to default and presents a risk to the lender.
Good (ranging between 650-750)- this score indicates that the customer has a healthy credit rating and has a balanced credit history. Credit has been repaid and the report demonstrates a history of financially sound decisions. Loans, if any, have been settled within the period provided. Extending credit to such a customer is a low risk for the lender.
Very Good (ranging between 750-850)- this score indicates that the customer has a very good history of financial management and their financial history demonstrates sharp financial acumen regarding the utilization of credit. Extending credit to such a customer is very low risk to the lender as the customer has a proven record of creditworthiness.
Excellent (850)- this score is the highest allotted by Experian and indicates a customer with an almost perfect credit record. All lines of credit extended to a customer with such a score are very low risk due to their proven financial management.
Experian Indian also provides additional services, as listed below:
Experian also provides its clients with decision analytics, which forms an integral part of the services it provides to other businesses and organisations. The company helps companies in the following sectors with decision analytics:
- Financial Services.
Customer Lifecycle Management
Experian provides its clients with in-depth, tailor-made solutions that enables clients to make decisions that will increase their overall performance and lead to sustainable organisation-wide growth.
Credit Risk Management
Through effective credit risk management techniques, Experian helps its clients to improve their chances of mitigating risks associated with bad debts and loan loss reserves through its analytics that offer insight and lead to better decision making.
Experian provides its clients with the best-in-class automation software that provides them with effective tools to manage their debt portfolios and provides them with the necessary tools to take informed decisions based on current market environments, allowing for higher efficiency through collections management.
Experian’s range of products enable clients to manage fraud at all levels through effective screening at all levels that provides continued access through a single platform to ensure fraud is detected instantly.
Experian is one of 4 credit rating companies that operate in India, the other being CIBIL, Highmark and Equifax. All 4 agencies provide similar information, though CIBIL is the most prominent. However, as per an RBI directive, the credit information provided by all four carry equal merit.
General Questions about Experian
What is Experian?
A. Experian is a credit information company that started operating in India in 2010. It is registered as Experian Credit Information Company of India Pvt Ltd and is a part of the global company called Experian that has operations in multiple countries.
What information does the company collect?
A. For the purpose of credit reports, Experian will collect information regarding credit, both offered and applied for, along with basic details of the person. These details may include things like names and Permanent Account Numbers.
How is the information collected by them used?
A. The information collected by Experian is assimilated under the person’s name and serves to create a credit profile that shows the payment/repayment behaviours of the individual.
Who will be using the information used by Experian?
A. The information collected is made available to those members who need access to such information for the purpose of offering credit or checking the identity of a person. No non-member has access to this information.
Why are these credit scores important?
A. These credit scores are important because the help financial institution like banks and other lenders decide on whether they can offer a loan or credit card that has been applied for by an individual. The main purpose of this score is to help prevent bad debt and fraud.
How will the Experian credit score affect my loan applications?
A. The effect of a good/bad credit score is seen in the approval or rejection of a credit score. Should the score be low and payment history bad for other credit products, the banks can reject a loan or credit card that has been applied for. Should it be good then the banks can go ahead and offer the loan or credit card to the individual.