What is your credit score?

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: "Somebody is always watching." While this sounds more like a line straight out of X-Files, alien movies or pseudo CIA spy novels, it seems to fit so aptly when one thinks of the Credit Information Bureau of India Limited (CIBIL). CIBIL is a privately owned company, which collects credit information on over 140 million credit card holders and loan takers.

The company is owned by a syndicate of banks now, but was originally promoted by the State Bank of India (SBI), Housing Development Finance Corporation Limited (HDFC), Dun & Bradstreet Information Services India Private Limited (D&B) and TransUnion International Inc (TransUnion). A number of banks, including Bank of India, HSBC, ICICI, Central Bank, etc, now hold stakes within this firm.

CIBIL is India's first credit information bureau. This credit information bureau was formed on the basis of recommendations of a working group constituted by RBI to establish a world class bureau in India in the private sector, which would be a technology-driven service provider.

It helps banks, financial institutions and other financiers to share credit histories of retail and commercial customers. The bureau provides both positive and negative information about bank's borrowers, which empowers lenders in assessing the credit worthiness of potential customers.

How do they work?

CIBIL shares a relationship with all banks based on the concept of sharing. They collate the credit information available from all financing institutions, which are its members, and provide an informed report, which takes into consideration all the financial activities of a consumer when asked for by the bank. The need for having an independent body for doing this is to keep checks and balances.

Suppose a person has taken a loan from one bank where they have paid their EMI’s promptly, however, on another loan taken from a second bank they have defaulted on the payment. In this case, when this customer applies for a credit card or loan again, say to the first bank where his record is impeccable, the bank, by following the norm, would seek out his credit report from CIBIL, which would then show his default oh his prior loan with the other bank.