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Everything You Need to Know About Credit Rating Agencies in India

  • Highlights

  • Credit rating agencies evaluate issuers and entities

  • Credit information bureaus evaluate individual borrowers

  • Credit scores help lenders assess applications for credit

  • Credit ratings help investors make safer decisions

While Indian credit rating agencies (CRAs) evaluate the safety or risk of investment options offered by companies or institutions, credit information companies in India, commonly referred to as credit information bureaus (CIBs), generate credit scores and reports related to borrowers in the country. The latter help evaluate the creditworthiness and debt repayment ability of borrowers to help lenders assess risk better while the former rates an organisation’s offerings to help investors.

The difference between these institutions lies in the credit information bureau and credit rating agencies’ meaning and functions. Here’s all that you need to know as both are important in terms of your personal finances: when it comes you applying for a instant personal loan and when it comes to you making an investment.

Credit Rating Agencies in India

A credit rating agency rates various entities as borrowers based on their repayment ability using a range of metrics and factors. These entities exclude individuals and the ratings take the form of letters such as AAA, CCC, and so on. Since the amount borrowed by organisations, via their debt obligations, can run into lakhs and crores, those who invest in or lend to these organisations face a comparatively higher risk. Thus, with these credit ratings, investors or lenders can make better regarding organisational borrowers who may be:

  • State governments

  • Local governmental bodies

  • Companies

  • Special purpose entities

  • Non-profit organizations

Additional Read: Improve your CIBIL Score

List of Credit Rating Agencies in India

  • CRISIL

  • ICRA

  • CARE

  • ONICRA

  • Fitch India

  • BWR

  • SMERA

Here are the common functions of the credit rating agencies in India

  • CRAs rate entities based on their ability to repay a loan or service their debt

  • CRAs rate financial products offered by financial institutions such as banks, public companies, NBFCs, microfinance institutions and mutual fund companies. They rate debt instruments and short-term investment instruments such as fixed deposits, bank loans, bonds, and hybrid capital instruments.

  • CRA credit ratings of investments help investors in making informed decisions.

  • CRAs research the economy on the whole, including industries and companies and offers valuable analysis to its members.

  • CRAs offers risk solutions and fund evaluation services to the mutual fund industry.

  • CRAs provide policy and regulatory advice to leading organisations and the government.

List of Credit Rating Agencies in India

Unlike credit rating agencies, credit bureaus in India assign credit score to individual borrowers like you, based on your creditworthiness and repayment behaviour. They generate a three-digit credit score and credit report after evaluating your credit history. This helps the lenders weed out undesirable loan applications that carry high risk. For instance, the Experian credit score in India is between 300 and 850 and the CIBIL score range from 300 to 900. In both cases, the higher your score, the stronger is your financial profile.

List of Credit Rating Agencies in India

  • Experian

  • Equifax

  • TransUnion CIBIL

Additional Read: CIBIL Score Calculation

Here are the common functions of the credit information bureaus in India

  • CIBs maintain a repository of credit information of individual borrowers

  • CIBs offer members comprehensive risk management tools

  • CIBs provide lenders with portfolio reviews of borrowers that helps them study a borrower’s credit behaviour and past or existing relationships with multiple lenders

Apart from supporting lenders, credit information companies also help individual borrowers monitor their credit health. So, before you apply for a loan, especially an unsecured loan like a personal loan, check your credit score from one of the top credit information companies like CIBIL. This will allow you to see if you will get an ample sanction at pocket-friendly terms.

Generally, a score of 750 or above can help you get a quick sanction of the cost-effective Bajaj Finserv Personal Loan of up to Rs.25 lakh. Not only this, you can enjoy a speedy approval thanks to the simple eligibility terms and minimal documentation required here.

Get started now and check your pre-approved personal loan offer by submitting simple details like your name and contact number. This will allow you to access a customised deal with instant approval waiting just for you!

Additional Read: CIBIL Report Correction

DISCLAIMER:
The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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