About The Credit Bureau
Credit Bureaus collect and collate personal information, financial data, and alternative data on individuals from a variety of sources called data furnishers with which the bureaus have a relationship. Data furnishers are typically creditors, lenders and utilities, debt collection agencies that a consumer has had a relationship or experience with. Data furnishers report their payment experience with the consumer to the credit bureaus. The data provided by the furnishers as well as collected by the bureaus are then aggregated into the credit bureau's data repository or files. The resulting information is made available on request to customers of their credit bureau for the purposes of credit risk assessment, credit scoring or for other purposes. Credit bureau typically applies a mathematical algorithm to assess the credit worthiness of a customer.
The credit report and score helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate and other terms of a lone. Interest rates may not the same for everyone, but instead can be based on risk-based pricing where customers with poor credit repayment histories may pay a higher annual interest rate than consumers who don't.
In India, as per the Credit Information Act of 2005, all the credit history of customers is uploaded onto the credit bureau. The major consumer credit bureaus in India are CIBIL and Equifax.
These credit reports are used for loan approvals, credit card approvals, account opening, new job hiring. Even telecom and insurance companies are expected to shortly start uploading data onto the bureau.