Equifax Risk Score
About Equifax India
Equifax India is one of the 4 credit bureaus that are authorized by the RBI to operate in India—the other three being CIBIL, Experian and High Mark. It is registered in India as Equifax Credit Information Services Private Limited (ECIS). Equifax India is headquartered in Mumbai and has offices in Bangalore and Delhi. It is a joint venture between Equifax Inc., USA and seven leading Indian financial institutions - State Bank of India, Bank of Baroda, Bank of India, Kotak Mahindra Prime Limited, Religare Finvest Limited, Sundaram Finance Limited and Union Bank of India. It is registered and authorized by the Reserve Bank of India (RBI) to establish and run a credit information company under The Credit Information Companies Act of 2005.
The credit bureau collects and aggregates credit-related and allied data about individuals’ payments on their loans and credit cards. Banks and other non-banking financial companies (NBFCs) are required to provide Equifax and other credit information companies with this information on a periodic - generally monthly - basis.
As a credit information company that is registered under the CIC Act of 2005, the credit bureau processes the raw data reported by the credit institutions to come up with a usable and readable credit information report. The data is also subject to complicated algorithms and computations to arrive at an individual’s credit score. A basic Credit Information Report (CIR) gives a complete and comprehensive account of the potential borrowers’ credit profile - when they have borrowed, where they have borrowed from, how much they have borrowed, how many loan accounts they have, their repayment behavior, etc. It gives prospective lenders an accurate insight into the customer’s credit behavior. Having a good Equifax credit score is a direct reflection of how responsibly the borrower uses credit.
Equifax provides its member institutions with an array of credit-related products, analytics, and a host of other services that make it easier for its members to run business efficiently and improve revenues.
Equifax Risk Score
The Equifax risk score is designed to predict the possibility that a customer will default in the next 12 months based on the most recent repayment data. It helps lenders get an instant idea of a potential customer’s probability of default, based on his recent repayment behaviour.
The Equifax Risk Score also scores those who are new entrants to credit or those having very limited credit history, and also called as no-hits. No-hits are those consumer data files that bounce back when there is no corresponding matching record found on the database for the equivalent enquiry. This is due to the lack of complete/accurate data, having insufficient or limited credit history or the customer being completely new to credit.
This is the first product in the market to score new entrants and no-hits. It helps validate the repayment abilities of fresh borrowers to the lenders, particularly when the available credit history is severely restricted.
How is the Equifax Risk Score calculated?
The Equifax Risk Score is arrived at based on a variety of parameters such as demographic characteristics and traits and incorporating local market knowledge. It is developed using data from major market players. The data populated is then subjected to an array of advanced mathematical computations to arrive at the Equifax risk score. It is designed such that it evaluates potential consumers for his/her risk. Its classifications are consistent with global standards.
Equifax Consumer Bureau
The consumer bureau wing of Equifax was launched in India in 2010. Apart from providing lenders and borrowers with Credit Information Reports (CIR), it also provides, Equifax Dimensions, screening services, portfolio review, risk scores and alerts amongst other allied services to cater to the ever-changing requirements of its large member base. The services offered by the consumer bureau covers a whole gamut of credit-related products.
Equifax offers consumer credit files from across the country with the repayment trends of the consumer across all loans and credit cards. Equifax Alerts is one such product offered by the consumer bureau. It alerts lenders when the borrower has applied for fresh credit elsewhere, and also alerts lenders when the borrower’s repayment capacity has improved. These updated alerts make the collections process more efficient and allows lenders to allot resources where collections activity will have greater chances of success.
Banking and financial institutions are faced with constant challenge including acquiring and retaining customers in a highly unstable marketplace.
The Equifax consumer database provides both the lender and the borrower with a credit information report; both the lender and the borrower have the ability to access the information held in Equifax database. It helps the borrower maintain and review his/her credit history regularly. Borrowers are only allowed to access their basic credit information report. It helps the lender improve their customer base and reduce losses incurred due to defaults and delinquencies. It allows lenders to make faster, and more informed credit decisions, while simultaneously empowering them to be able to manage their risk and maximize business expansion and growth opportunities.
As a credit information company, Equifax also provides other credit related services to lenders, businesses and consumers - it provides consumer bureau related services like Equifax Alerts, Prescreen of One; multi-bureau solutions; value added services and verification services.
Only registered and authorized Equifax members are allowed to access the Equifax credit bureau, its database and allied products and tools.
Benefits of the products offered by Equifax Consumer Bureau
- Allows better lending decisions enabled by comprehensive view of the borrower’s credit record.
- Reduces risk associated with defaulting customers as it gives access to credit information of the customer along with his/her credit history and inquiry information over a period of time.
- Improves identification of the customer as it gives access to ID information as available with other Equifax members.
- Enables rigorous tracking of the customer’s credit portfolio on a periodic basis.