Equifax Microfinance Credit Information Report
Tackling the basics: What is Microfinance?
Microfinance, also referred to as microcredit, can be defined as “banking the unbankables”. Microfinance institutions help bring credit, savings and other financial products within the reach of people who are not served by regular banks. This is because in most cases, they are unable to offer sufficient collateral for loans which is a requirement for any type of secured loan within the formal banking system.
Microfinance is the provision of financial products like loans to low-income customers. Typically, microfinance institutions offer small loans which can be paid off on a weekly or monthly basis in small amounts. Microfinance institutions focus on individuals who are employed in the informal - usually cash - economy, generally have low incomes, and are often self-employed under conditions that deny them access to the formal banking system. For instance, a typical customer in India could include someone who runs a small roadside stall or creates and sells items they make in their own homes, etc.
In India, a sizable number of the population depends on this informal sector to meet their financial needs. Needless to say, as with any banking system, the microfinance sector has in the past, witnessed inefficiencies primarily due to non-payment of dues by many borrowers and lack of adequate credit information and data.
Equifax Microfinance bureau
Equifax India is one of the four credit bureaus that are authorized by RBI to issue credit information reports and credit scores amongst other credit-related services in India. It is registered under the Credit Information Companies Act. The other credit rating bureaus in India are CIBIL, Experian and High Mark.
Equifax started operations in India in the year 2010. It additionally launched a separate dedicated bureau in May 2011 to address the lending and regulatory requirements of microfinance institutions. Equifax currently has more than 1300 registered members and adds new members and data on a continuing basis.
In India, Equifax works closely with Microfinance Institutions Network (MFIN), and has come up with a working Microfinance Institution bureau framework. Equifax uses the latest technology and strategies to provide customized solutions to the Microfinance sector across the country. It leverages the power of highly adaptable and customizable technology platforms to ensure that the data provided is accurate, and the right data provided at the right time to help make the right decision.
Equifax Microfinance Institution bureau offers access to data from member microfinance institutions amongst other related products. Member microfinance institutions report to the credit bureau on a periodic basic to provide the bureau with relevant information on their consumer’s credit behavior and repayment pattern.
The exclusive Equifax report format comes with value added features that enables easier and faster understanding of the borrower's credit profile in the microfinance segment. It also allows lenders to access microfinance institutions' data. Equifax’s microfinance services have industry-specific search algorithms which matches and work accurately even when data availability is limited.
Equifax’s progressive technical and processes systems offer the following:
-Acceptance of input data which is secure and encrypted through multiple methods
-Weekly/Monthly data updates for swift and real-time information availability. It has accessible platforms and operations.
-Multiple product delivery networks.
-State-of-the-art infrastructure with high platform accessibility and convenience.
-Customer service for disputes, disclosures and other related process activities.
What is the Microfinance Credit Information Report (CIR)?
The microfinance CIR is a user-friendly and readable consumer credit report which is backed by advanced search and match algorithms. This helps lenders assess risk. It gives a bird-eye view of the borrower’s credit profile, along with a detailed report on credit behavior, that includes information on repayment track, active credit accounts etc. The consumer credit database is extensive and covers all regions in India.
The Equifax Microfinance credit information report includes:
Identification and contact details : This section helps lenders confirm and cross-check application information. It gives access to basic details like the consumer’s name, date of birth, age, permanent address, ID information, etc.
Credit Summary : Helps get a quick overview of the consumer's key credit characteristics. This section has information about all the lines of credits the consumer has. It offers a quick overview of the complete credit profile.
Recent Activity :
This section throws light on the recent lines of credit the consumer has acquired any any change in the status of loan accounts. Information present in this section helps lenders quickly assess the consumer's recent activity including accounts which have gone delinquent, new accounts that have been opened, etc., and thereby gauge current credit behavior and activity.
Account Details Section :
The most comprehensive of all sections is the accounts details section. This section lists both past and present credit accounts of the consumer. It has data on the repayment track of each of those accounts. The lender gets an accurate, account-wise break-up of the consumer’s repayment history.
This section is a reflection of the credit management capability of the consumer.
Inquiries Section :
This section of the report gives the details on the number of inquiries made on a consumer.
The credit information reports of potential borrowers help microfinance institutions, amongst other lenders, make better informed decisions on lending. Microfinance institutions use microfinance credit bureaus for credit information on potential customers. Equifax uses its extensive member base to collate and aggregate accurate information about users, ensuring that microfinance organizations get a comprehensive, all-inclusive picture of their potential borrowers.
Equifax Microfinance Risk Score
Equifax Microfinance Risk Score is an enhanced technology which is designed to help predict the likelihood of risk that a consumer would default or miss payments within 6 months of availing of a loan product. The microfinance score aims to facilitate speedier decision making and help lenders make a more informed decision regarding lending to customers in this sector. This scoring solution provides lenders with a perspective on potential risk and supports better lending decisions. Lenders are able to reduce loss due to the possibility of defaults and delinquencies; they are less exposed to risk than would be otherwise possible; and results in an increase in portfolio profitability.