What is Equifax?
You know how important your credit score and credit report are when applying for a loan or credit card. Well, Equifax is one of the companies that provides this information to lenders, who use it to evaluate your creditworthiness. Equifax is an American credit information company that operates in 15 countries globally. It was established in India in 2010 under the Credit Information Companies (Regulation) Act of 2005. It has more than 1300 member institutions and is headquartered in Mumbai.
In India, Equifax is registered as Equifax Credit Information Services Private Limited (ECIS). 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. Equifax provides solutions related to credit information, global analytics and managing risk for customers across India.
Equifax Consumer Credit Data
The RBI has mandated that all lending institutions (banks, NBFCs and other lenders) report the credit-related transactions of every customer to the four authorized credit bureaus in operation in India. Equifax thus collects huge amounts of credit-related data on millions of individual borrowers. This data is then subject to complex mathematical algorithms and sophisticated statistical analysis to arrive at a credit score for each individual that is a three digit number between 300 and 900. The detailed history of the individual’s credit behaviour is collated and presented in a readable form in a Credit Information Report (CIR). So the credit score gives a quick numeric snapshot of an individual’s credit profile, while a CIR is a detailed and comprehensive record of the individual’s past and present credit behaviour.
This detailed information helps both lenders and borrowers. Lenders have access to a potential borrower’s credit background which enables them to evaluate his/her creditworthiness and make quicker, data-driven decisions. This is in contrast to the slow, tedious, employee- intensive, and subjective personal evaluations of the past that banks carried out. Access to this detailed data-rich customer credit information helps lenders increase productivity and improve their bottom-line results.
Borrowers too benefit with increased transparency in the lending decision process. The information helps speed up the loan approval process and makes it more efficient and transparent. Having access to their credit records also helps individuals manage their credit health. Being aware of their credit challenges helps them take charge of their financial health and take steps to improve it. The detailed data records also help ensure that individuals can quickly identify any ID theft or suspicious activity of any nature.
In addition to pure credit information services, Equifax also uses its credit database to offer a variety of value-added products that are put to many uses. These products include credit risk management and analysis, risk management solutions, triggers for detecting fraud, technologies to help advance the decision-making process and tools for marketing. All these products are made possible by the rich store of information available in the consumer credit database. The raw data contained in the database is of value to a variety of sectors beyond just the banking and financial services, including insurance, telecom, background verification agencies etc.
Features of the Equifax Consumer Credit Database
Large geographic and demographic reach: Equifax has consumer credit files from across the country with details on millions of customers regarding their repayment history on their loans and credit cards.
Constantly updated, accurate information: The database is constantly renewed on a regular basis with millions of data records being submitted by member institutions on an ongoing basis.
Technology: The database is operated with the help of sophisticated search techniques and matching logic. This technology aggregates all relevant information regarding the individual customer across multiple loans and credit cards. The technology and operations platforms are of global standard and enable secure data storage. It also provides member institutions with safe and speedy access to sensitive consumer data.
Benefits of the Equifax Consumer Credit Database
Speeds up the decision making process: Having access to this vast information bank helps lenders make more informed and data-based lending decisions. The credit score gives lenders a snapshot of the customer’s creditworthiness, while the detailed Credit Information Report gives them a 360 degree perspective on the customer’s credit behaviour over an extended time frame and across multiple loans and credit cards. This combination of short term and long term perspectives helps lenders make a more extensive and deeper evaluation of each customer without necessarily big investments of time or money checking the creditworthiness of each individual.
Mitigates risk exposure of lenders: Access to detailed information on each of the customer’s trade lines and inquiries over a significant time span allows lenders to more carefully gauge a customer’s creditworthiness and accordingly calibrate their risk exposure. More judicious risk management, based on exhaustive data, can have a significant impact on efficiency and revenues.
Better identification processes: The vast mine of data held in the customer database also leads to better consumer identification of the consumer with greater access to ID information. The Equifax consumer database is currently linked to Indian government databases like UIDAI and NSDL for AADHAR and PAN card validation. This makes the authentication process significantly quicker, cheaper and more accurate, and reduces the chances of fraud or error.
Easier tracking: The database allows member institutions to more easily track the credit performance of their portfolio on a periodic basis.
It is important to keep in mind that individuals can only access their own credit information report (Basic CIR). All other products are available only for members and specified users.