Difference Between Equifax And Credit Score
Published: 2024-05-06 10:26:10

A credit score is essential for obtaining any form of loan, particularly for the lender to determine the borrower’s credit history. As per the report, credit score is important when applying for loans such as home loans, gold loans, personal loans, and so on. It is practically necessary for any form of debt.  

Equifax and CIBIL are the two credit bureaus authorized by the Reserve Bank of India. These companies hold all the data on the credit activities of customers and provide user-friendly credit report information. Banks and financial institutions use this information to determine a person creditworthiness. 

Equifax score vs CIBIL score
The importance of a credit score can be determined by taking out a loan or using a credit card. However, are there differences in the credit scores supplied by the various bureaus? In this article, we will explain what a credit score is and what are the differences between the Equifax credit score and the CIBIL score.  

What is a credit score?  
A credit score is a digit numeric expression to represent a person’s creditworthiness or their ability to repay. It is a statistical measure based on information from a person’s credit record. Credit bureaus such as Equifax, Experian, and maintains it CIBIL TransUnion.  

About two bureaus:  
Equifax is a credit information provider Headquartered in Mumbai. It was established in 2010 and maintains 200 million consumer credit profiles. They collect data from various sources, including banks and non-banking financial to build comprehensive credit reports.

Credit Information Bureau India Limited (CIBIL) was established in 2000 as India’s first credit bureau. TransUnion International Inc., an American credit services corporation, acquired it in 2005 and currently owns most of the shares. The company is headquartered in Mumbai and has been renamed TransUnion CIBIL. However, the credit score is often called the CIBIL score. 

Difference between Equifax and CIBIL Score: 
Feature 	CIBIL Score 	Equifax  
Provider 	TransUnion CIBIL 	Equifax 
Score Range 	300 – 900 	300 – 850 
Common Use 	Most lenders in India use CIBIL Score 	Commonly used by lenders in the US 
Main Factors 	Payment history, credit utilization, credit age, inquiries 	Payment history, amounts owed, credit age, credit mix, new credit 
Accessing Score 	Can check CIBIL Score from CIBIL website or report 	Can purchase Equifax credit report and score from Equifax 
Cost 	Free CIBIL Score report once a year, paid reports at other times 	Need to purchase credit report and score, pricing varies 
Report Details 	Includes account details, inquiries, score reasons 	Includes personal information, accounts, public records, score factors 
Why Do Equifax and CIBIL Scores Differ?  
Every credit bureau organization uses its algorithm to create credit reports. Various factors lead to a different set of credit reports .

Data sources:  
Equifax and CIBIL collect data from different financial institutions, such as banks and credit card companies. The data they access may vary from individual-leading to differences in scores.

Different scoring models:  
Equifax uses its own secret credit scoring model, while CIBIL follows the CIBIL TransUnion Score model. Both Equifax and CIBIL are not releasing their secret algorithm to the public. These factors can differ in a variety of aspects, including payment history, credit use, and others.  

Score Calculation:  
Even when using identical data inputs, each bureau has its own calculation method. The exact calculation and algorithm used to arrive at the scores are unique to each credit bureau.  

Target different locations:
Equifax is a global corporation, while CIBIL focuses on the Indian market. This can lead to differences in scores and certain credit behaviors.  

Which score should you use: Equifax or CIBIL?  
When picking between the Equifax score vs CIBIL score, consider your financial status and the requirements of the lender you want to approach.  

Consider the following factors before going for a personal loan:  

Location:
If you are looking for lenders from India, you should prioritize your CIBIL Score as it’s a primary credit bureau for the Indian market. If you are dealing with American lenders, the Equifax score will likely be more relevant.  

Lender Preferences:  
Different lenders can choose to use credit bureaus for credit reports and scores. If you are considering taking out a loan from a specific lender, it is good to ask them which bureau they use.  

Type of Credit:
Certain forms of credit products, such as home loans or personal loans, may have specific requirements or a preference for credit bureau scores.  

Credit History:  
If one credit bureau captures more credit history than another, their respective scores may differ. That impacts which one provides a more accurate representation.  

Conclusion:
Equifax and CIBIL are trustworthy credit bureaus in India. The choice between Equifax vs CIBIL scores is up to the lender, and borrowers should make the right choice before taking out a personal loan. Select a bank or financial institution that is RBI-registered and partner with these credit bureaus, such as Zap Money.  

Zap Money is an online personal loan app that offers quick personal loans online and has partnered with Equifax, CRIF , and CIBIL.