Is checking credit report annually for errors enough? A case study

28-year-old Sabrish Ramalinga is an ideal law-abiding conscientious citizen. Right from his childhood, Sabrish has played by the rule book. He did his homework on time, submitted his assignments timely, and got good grades. Thus, when it came to handling his finances, there was no question of Sabrish going wrong or seeking loans for bad credit. Soon after he got a job, he availed of one credit card and a two-wheeler loan.

Like an ideal credit user, he spends small amounts on his credit card and makes full repayments every billing cycle. He has also automated the process of the loan repayment from his salary account and thus has never delayed or missed an EMI repayment. He has heard about people availing of bad credit personal loans and does not want to be one among them. He is also aware of the fact that keeping a vigil on the credit report is of utmost necessity in today’s context and does not want to feature in the loan defaulters list. Therefore, for the past three years (ever since he availed of his first credit card) he requests for his CIBIL report and goes through it meticulously.

Since he likes to schedule his tasks, he carries out this credit check in January each year. His CIBIL score ranges from 830-850, making him eligible for timely credit. The year 2017 is a special one for Sabrish as he and his childhood sweetheart Sangeeta are to tie the knot later this year in the month of May. Sabrish had thus had it planned to avail of a home loan in March 2017. He and Sangeeta had decided to take a joint home loan and had been saving for it for the past three years as well. Thus, Sabrish thought that nothing could go wrong when he made an application for a home loan.

Fate however had a nasty surprise in store for him. By making use of the newly introduced facility of CIBIL to avail of one free CIBIL report each year, Sabrish was in for a shock! He saw that his CIBIL score had slipped below 650. On looking closer into the account information Sabrish found that the vehicle loan, that he had in fact foreclosed with a performance bonus in April had not been updated in his CIBIL report. Thus, he was being portrayed as a loan defaulter on the account that was now closed!

The mistake Sabrish had made was that he conducted only a yearly check on his CIBIL report and did not carry out a credit check once he had foreclosed his loan. Sabrish thus had to go through the rigmarole of raising a CIBIL dispute. Once he had done that, he waited for a week and followed up with the concerned bank. When he got the assurance that the rectified information had been resent to the credit bureau, Sabrish re-checked his CIBIL report about a week back.

Much to his relief, the information had been updated on his CIBIL report and he did not have to think about a personal loan for a low CIBIL score or a bad credit fix. This means, that Sabrish and Sangeeta’s plan to apply for a home loan in March remains intact and they do not have to postpone it owing to a poor CIBIL score. Had Sabrish’s score not been rectified, he would have run the risk of their loan application getting rejected, despite Sangeeta’s CIBIL score is more than 750.

Sabrish thus had to learn it the hard way that checking one’s credit score and credit report is not enough. Had he checked his credit report once mid-year in 2016 instead of waiting for the beginning of 2017, he would have discovered this error and could have avoided all the stress and hassle of raising a CIBIL dispute and waiting for it to be rectified at the eleventh hour just before making a loan application. Learning a good lesson from this debacle of being shown as a loan defaulter for no fault of his, Sabrish has taken a vow even before they officially become man and wife! They have vowed to check their respective credit scores at least twice annually!

You too can take a leaf from Sabrish and Sangeeta’s experience and decide the do the same. Your credit report contains all the details of your borrowing and repayment history and plays an important role in the approval of the credit facility you apply for. This is because the Reserve Bank of India has made it mandatory for all banks to go through the CIBIL report of an individual as a part of the credit assessment process. A good credit score and report makes it easier for you to get a credit facility that you may need for the moment. Thus, it is not only important to maintain a high CIBIL score, but it is also necessary to inculcate the discipline of checking your credit report at least twice annually.

By doing so, you can not only ensure that your financial health is in order, you can avoid errors and discrepancies from creeping into your report. Banks and credit bureaus handle a large amount of data every day, and despite their best efforts, it is not uncommon for errors like the one that cropped up in Sabrish’s report.

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