No one is perfect. Credit bureaus and their staff is no exception to this universal rule. Credit bureaus receive customer data from various lenders which is then fed into individual reports. They often mix up data and botch up several scores. It is no surprise that a bad score acts as a bottleneck to credit. It may not be your fault and yet you may have a poor score.
Your report could be muddled with inaccuracies and only if you choose to review your report you can spot them and have them corrected. Or else, you may have to suffer just like a few of our patrons, who had to settle for personal loans for low CIBIL score as their reports displayed a poor score. Here are their stories. We are hoping you would pick some useful pointers from their examples.
Error #1: Debts That Don’t Belong to You Praveen Agrawal, a law-abiding citizen of the national capital, was hard-working and very careful with his money. He worked with clockwork precision, meticulously planning his activities pre-hand. When his loan application was rejected by two of the mainstream banks it left him red-faced. He was shocked to learn that he had a miserable CIBIL score of 570. He approached an NBFC that agreed to lend to him at a higher rate of interest. Upon reviewing his credit report we found something so minor and yet so relevant. Despite being an impeccable borrower in the past Praveen’s score was miserable because of certain accounts showing on his report that were not his. Incidentally, the bureau had mixed up the records of two different names – Praveen Agrawal and Praveen Agarwal. A minor spelling error cost our Mr. Agrawal quite some penny and pain. Once those records were off his report, within a span of 30 days his score hovered over 700.
Error #2: Debts that are yours But Do Not Show on Your Report This is a classic example of an error. As against the previous case, Nita Sharma had a low lying score all because her primary lender, Saraswat Co-operative Bank, had not sent any of her details to CIBIL. In the absence of records, the bureau had assumed she had no credit history and therefore she did not have a favorable score. Since she didn’t know why her score was so poor, she agreed to settle for high-cost debt. We helped her contact her lender and seek clarification on why her records were not being shared with the bureau. Within a couple of months, Nita went from being shy about her credit score to being boastful about her good character as a borrower. However, she regretted not having reviewed her report earlier for she would have saved a huge amount that she paid on her personal loan.
Error#3: Debts That Reflect an Inaccurate or Incomplete Payment History Similar to Nita’s case, was Saloni Srivastava’s case. Although Saloni’s bank did send the records to the bureau they were either delayed or they missed sending the complete information. When Saloni’s daughter was getting married she used her credit card quite often, and the bill was running into lakhs for a few consecutive months. All this while Saloni settled her card payment in full, only to learn later that they were being misreported by the bank, as the staff omitted to add a “zero” in the end, making it appear that she had only repaid a few thousand rupees. Few consecutive defaults with a huge outstanding card bill made her score nosedive. Saloni was so busy with the arrangements for her daughter’s wedding that she didn’t have time to check her score and when her student loan application for her son was declined, she was in the doldrums. She quickly picked the next available high-interest loan for bad credit to pay her son’s fee before the deadline. When she finally found out the truth it left a bitter taste in her mouth.
Error #4: Incorrect status of account Partheshwar Parekh, didn’t have time to think twice when he had to pay for his wife’s treatment. He wasn’t prepared for the emergency and didn’t know why banks wouldn’t co-operate with him. He rushed to the nearest NBFC and picked a personal loan with an interest of 27%. Once his wife was well, he approached us with his concerns. We sat down with Partheshwar and went over his report, detail by detail. Soon we discovered that his fully paid car loan and the personal loan still showed on his report as “open and unpaid”. He also had quite a few credit inquiries in his name that he supposedly did not authorize. That had caused the score to continuously plummet.
Following our suggestion, he raised a CIBIL dispute and made sure his report now reflected proper information.
Our Recommendations Primarily, credit reports carry three types of errors:
- Error in Details under Personal Information
- Error under Account Information Section
- Unauthorized Inquiries Pay attention to all details, from a minor goof-up to outrageous oversights, have them all corrected.
You must review your own report once in six months. Raise a dispute for spurious items and incorrect details. All details don’t affect your score yet to avoid an embarrassing fiasco in the future you must keep your records up to date. Make sure your creditor sends reports to the bureau on time.
A lag on the lender’s part could also cause your score to dip. Debts that you have repaid shouldn’t say as “open” or “settled”. They should be “Closed” on the report too. There could be debts that you haven’t guaranteed and yet they reflect on your report erroneously. Seek professional guidance if you feel lost at the task of self-reviewing.