What does Equifax do?

Equifax in India is registered as Equifax Credit Information Services Private Limited (ECIS), headquartered in Mumbai. It is a joint venture between Equifax Inc., USA and seven leading Indian financial institutions and provides credit information services amongst other services. Member institutions report to the credit bureau on a periodic basis about individuals’ credit behaviour. The credit bureau then collates and processes this information into a readable and usable form and provides credit information reports and a credit score amongst other related products.

Equifax maintains records of all credit-related activity of individuals and companies including all transactions on loans and credit cards. This extensive data enables lenders to make informed decisions on evaluating applications for loans in India.

How is the Equifax Score calculated?

An Equifax score is calculated on the basis of several factors, with your repayment history being one of the most important factors.

Member banks and non-banking financial companies (NBFCs) provide Equifax with information on every customer’s credit activity including payments on their loans and credit cards, their credit limit, the age and number of their credit accounts and status of these accounts, among other data. The bureau then uses sophisticated mathematical algorithms to calculate the individual’s credit score.

Your credit score is an extensive analysis of your credit worthiness. Lenders rely on this number to give them an accurate idea of your credit past and current behaviour. A good credit score reflects financial maturity and experience in handling different loan accounts which is an important factor in the evaluation of your loan or credit card application.

Is it important to Access My Equifax Report and Score?

It is crucial that you periodically check your Equifax report and carefully read it to make sure that the information contained in your credit report is one hundred per cent correct. Checking your credit report helps weed out wrong information and misrepresentation which might be negatively affecting your credit score. It will also help in detecting fraud and ID theft.

If you notice any reporting errors - like your name, address, or contact details or wrong account status or credit limit, immediately file a dispute and get it corrected.

Advantages of having a good credit score

Following are a few advantages of having a good credit score:

• It hastens the loan-approval process
• It enables you to negotiate better terms and conditions, for instance, a lower rate of interest. An interest rate that is reduced by just 0.5% can translate into savings of thousands of rupees.
• It reduces the possibility of loan or credit card rejection

How do I maintain a good Equifax score?

There are several ways by which you can improve and maintain your Equifax score.

Pay your dues in full every month. This will aid in two ways—avoid accumulated interest and allow your credit score rise.

Pay all your bills on time, every time consistently. Set up auto debit so that your bank has standing instruction to debit your account to pay your monthly bills. This ensures that you do not miss a payment due to carelessness or oversight. Ensure you take steps so that you do not miss a payment and receive the requisite reminders and updates from your lender via SMS, Email and post. Keep in mind that a missed payment, no matter why and how it happened, has a considerable impact on your credit score.

Do not close your older credit card accounts for newer or better credit cards. It will cut short your credit history. Lenders always look for a longer history; this will help establish that you are a trusted borrower, and the lender will have more information on your credit history and repayment behaviour.

Only apply for credit that you need. If you apply for multiple sources of credit in a short while, it will be detrimental to your credit score as it signifies that you are in urgent need of credit from various sources.

Only apply to the lender where you have the best chance of qualifying for credit. Every rejection can cause your credit score to drop further.