Understanding Your Experian Credit Score
Experian is a globally recognised credit information company that has its operations in multiple countries. In India, it started its operation in 2010. It is the only credit information company that licensed by Credit Information Companies (Regulation) Act 2005 (CICRA 2005).
As per guidelines issued by the RBI and Credit Information Companies (Regulation) Act of 2005, Experian provides credit score and credit report to both consumers and lenders.
What Is Experian Credit Score?
Experian Credit Score is a numeric representation of your credit information report (CIR). This score is calculated by Experian India, and it is based on the repayment history of your existing and previous loans and credit cards. It also includes the details of enquiries made by various financial institutions, such as banks and NBFCs.
Experian Credit Score Range
- Very Low: 300-500
- Low: 500-650
- Good: 650-750
- Very Good: 750-850
- Excellent: 850
How to Check Experian Credit Score Online?
Note: As per the RBI directive, you can get a free credit report from Experian every year. However, for every successive credit report requested in the same calendar, you’ll be charged a fee of ₹399.
Step 1: Go to Experian official website.
Step 2: Enter your name as on your PAN card, mobile number, and email. An OTP will be sent to your mobile.
Step 3: You’ll be directed to another page where you’ll need to enter your date of birth, PAN card number, gender, and address. Tick the declaration box and click on the “Get Report” button.
Step 4: You will then be taken to the payment page where you’ll have to pay a fee of ₹399 (including taxes) to access your Experian CIR and credit score.
How Is Experian Credit Score Calculated?
Like the other credit bureaus in India, Experian alsohas several financial institutions listed as its members, including banks, NBFCs and other lending institutions. Periodically, these member institutions report the credit information of their current borrowers to Experian. Experian uses this information to prepare the borrower’s credit information report. It also uses key aspects of the credit history and its proprietary algorithm to generate a 3-digit number that ranges between 300 and 850. This 3-digit number is a summary of the borrower’s credit history and is commonly known as the Experian score. While the formula that generates the Experian score is protected by law and is not exactly known, the following factors are known to affect the credit score of an individual:
- Repayment history,
- Credit utilisation ratio,
- Length of credit history, and
- Total debt
- New credit/loan applications
How Can I Improve My Experian Credit Score?
Follow these tips to improve your Experian credit score:
- Make timely payments on your loans and credit cards.
- Do not apply for multiple credit cards or loans within a short time.
- Check your credit report and credit score regularly. If you see any errors or inaccuracies, immediately request a rectification.
- Maintain a low credit utilisation ratio, preferably below 30%.
What does an Experian credit score mean?
Experian Credit Score is a numeric representation of your repayment history and credit behaviour. Banks and other financial institutions access your credit score and credit report to determine your creditworthiness. If your Experian credit score is high, the potential lenders consider you as low risk and approve your loan application with favourable loan terms. On the other hand, if your Experian score is low, you are considered a risky borrower (high chances of defaulting on a loan) and your loan application may be rejected, and if approved, it will be with a high-interest rate and non-favourable loan terms.
What does an Experian Credit Information Report mean?
Your Experian Credit Information Report (‘Experian CIR’) is a detailed summary of your credit information. It contains information about your credit history, your credit accounts, payments, identity information, and recent enquiries.
How is Experian CIR beneficial to individuals?
Experian CIR is a compilation of your credit history. The data present in the credit report is provided by the members of Experian, such as banks and other lending institutions. By checking your Experian credit report frequently, you will be able to point out discrepancies and inaccuracies in your credit report and get them rectified immediately. This can safeguard you from potential thefts and frauds.
How often is Experian CIR updated?
The day of the month that each member institution sends information varies. For example, member X may send the data on the first of every month, but member Y may send the data on the 15th of every month. So, Experian updates the credit information as soon as the data is received and uploaded on the system.
Is it important to check my Experian CIR regularly?
It is recommended to check the credit report regularly to make sure that the information is accurate and up to date. If there are mistakes in your credit report, you can immediately dispute it with Experian; otherwise, these errors can potentially harm your credit score. It’s also a good idea to check your credit score before applying for any loan or credit card. If your credit score is high, you stand a better chance of getting a loan approved at favourable terms.
How is the Experian credit score different from credit scores provided by other credit bureaus?
The credit bureaus may use different data samples and techniques to calculate their credit scores. Therefore, the credit score provided by each of the credit bureaus is different and have a unique meaning.
The Experian score uses the credit information received from the bureau members (banks, NBFCs and other financial organisations). This credit information may or may not be the same as the information available with other credit bureaus.
If I take a loan from Lender A, will Lender B know that I have taken a loan from Lender A and will this information reflect on my credit report?
All the credit information on which your CIR is based is supplied by Experian’s member banks, NBFCs, and other financial institutions. If both lenders A and lender B are members of Experian, then this information will be shown to the enquiring lender. However, the name of the lender who submitted the information is not shown to the other member, but it is shown in your CIR.