Errors and disputes on your CIBIL report can be damaging

10-Dec-2015 written by : FSI-Team

In the world that we live in today, it is very important to have a good credit score, as it is a measure of your financial health. Not just lenders, but even potential employers have now begun to refer to your CIBIL score to assess whether or not you will turn out to be a trustworthy and responsible employee. You should therefore always be in a pursuit to increase your CIBIL score, and keep it at a level of 750 and above (out of 900).

Sometimes though, even if you think you are doing things right by way of maintaining good credit behaviour, your CIBIL score may be low on account of errors. If you do not check your CIBIL score occasionally and are unaware about how to raise a CIBIL dispute, and it can have a continual damaging effect on your CIBIL score. This is because, your CIBIL score is calculated on the basis of your credit report by using algorithms that indicate the likelihood of your delinquency on a credit account. So if the information fed into the CIBIL report is incorrect your CIBIL score will go down drastically, for no fault of yours.

A credit report error may cost you dearly

Such as an error may only come to light when you are applying for new credit. If you discover that your CIBIL score is low only at the time of applying for a loan, it may be too late to raise a CIBIL dispute, as you already run the risk of losing out on a chance to avail of the credit by then. The lender may reject your loan application on account of a poor CIBIL score. It is therefore very important for you not only to check your CIBIL score and CIBIL report periodically, it is also important for you to know how to correct your CIBIL report in case there are discrepancies.

Keeping a check on your CIBIL score and CIBIL report periodically will bring to light discrepancies if any and allow you to seek a timely resolution. With discrepancies out of the way, you can continue in your pursuit to enhance credit score, so that you can be sure that you have access to credit when you require it. Ideally, you should ensure that your credit report is error free and your credit score is satisfactory at least six months before you are applying for a new loan. But before we delve in details about how to correct your CIBIL report, let us take a look at what are the types of errors of disputes you may find in your CIBIL report.

Different types of credit report errors

To put it simply, an error in your credit report is the kind of information that should not be there and is bringing down your credit score. Errors of different kinds may show up on your credit report. For instance, they may be account related, meaning, a credit card or a loan account that does not belong to you, may show up under your name. Similarly, your credit report may be reflecting a late payment on a credit card or a loan account that you have been paying off regularly. There may also be an erroneous entry of a loan account that was closed by you successfully, but still featuring as unpaid and open in your credit report.

There may also be personal information errors such a wrong name or address that features in your credit report. While this may sound simple, you must be cautious of identity theft. An individual may have managed to obtain your financial information, and may know enough to open credit accounts under your name without you being aware of it. Such errors can be seriously damaging to your credit history and may mar your chances of getting credit when you need it the most. Besides such identity theft disputes, if not discovered on time, may take longer to resolve.

The dispute resolution process

Credit report errors may occur because of a wrong data entry by the lender, or a delay in the entry of the financial information that pertains to you. Errors may be the result of a simple typographical mistake or a broader systemic failure of the lender’s data feeding process to the respective credit bureaus. The problem with an error in your credit report is that even when you discover it, you cannot resolve it by yourself . You must necessarily raise a dispute with the credit bureau.

In case of CIBIL, India’s premiere credit bureau, a CIBIL dispute once raised, goes through the grievance redressal cell, that sends the disputed financial information to the concerned lender. The lender then verifies the error and re-sends the correct information pertaining to your credit account back to CIBIL. CIBIL on its part, receives the information and makes the necessary changes in your CIBIL report. Once everything is back in order, the rectified information is taken into account while calculating your CIBIL score. This information then results in an increase in your credit score. This process of rectification can take a maximum of 30 days that may prove detrimental to your chances of availing credit when you require it.

It is therefore of utmost importance to keep checking your credit score and scanning your credit report periodically for errors. Errors if any, must be reported to the concerned credit bureau immediately, after which the redressal mechanism comes into play. Unless you keep a hawk eye on the information being fed into your report, an error may bring your credit score crashing down. Thus as you can see, it is not just enough to make an effort to enhance your credit score, you must also scan it for errors and resolve them on time to prevent unnecessary hassles when you are about to avail of a loan.



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