The Credit Bureau collects data such as a database of bounced cheque, payment default and repayment habits etc from both financial institutions such as banks and credit card companies and a variety of NBFCs (Non–Banking Financial Company). Based on that, they categorize information in Negative Data and Positive Data.
In study, researchers have found that a comprehensive credit reporting system generates more accurate scores in scoring models which helps to produce better predictions, and improves the ability of lenders to separate low risk borrowers from high risk borrowers.
