What To Do When Your Credit Score Assumes You are Guilty

Financial gurus always emphasize the importance of reviewing the credit report and credit score periodically. Even though people know that the CIBIL score affects many aspects of their financial life, not many keep a regular check on it. It is only when a need for a loan crop up, do we pay attention to this number to ensure that it is good enough to get approval.

A high CIBIL score is usually a prerequisite for getting approval of an unsecured personal loan. The lenders are cautious while scrutinizing the borrower’s application as the loan is not backed by any collateral. Many times the borrowers don’t bother to check their credit situation thinking that everything would be in order. They assume that if they follow good credit habits they need not worry about the credit score.

Often such people are taken by surprise when their personal loan application gets rejected due to a low CIBIL score. On checking the score they find that the credit bureaus have given them an average or a poor credit rating. The culprit here turns out to be errors in the CIBIL report. Since the CIBIL score is a direct reflection of what your report contains, it is imperative to regularly check whether the information recorded it is true and up to date. Many people become victims of identity theft and experience a sharp drop in their credit score. But they realize it only when their personal loan application gets rejected. The first thing that should be done in such cases is to definitely report these errors to the bureau and take measures to get them corrected.

There is an online redressal mechanism for handling disputes. Fill the dispute resolution form and also send them an email with supporting documents. If you provide evidence to prove your claim, the dispute can be resolved faster. The bureau will contact the creditor to verify the claim. If the creditor accepts that a mistake was indeed made, CIBIL will rectify the error. Without a formal authentication from the creditor CIBIL will not make any changes on its own. The entire resolution process takes around 2 months and sometimes even more if the creditor takes time to respond with the required information. But even when errors are rectified it would take a few months to a year to see improvement in the score.

If you are in dire need of funds and cannot wait till your credit score shows improvement, do not despair. You can still secure a loan to meet your cash requirements. When most leading banks reject your application because your CIBIL score is below their cut-off criteria many other doors open. While mainstream banks consider lending to you as a bad investment there are others who find it as a good opportunity to get high interest in their funds.

Such lenders offer Personal Loans with low CIBIL score at a high rate of interest. They do not follow a theoretical approach to evaluate loan applications. If you have a valid explanation and justification for why your score dropped, you can expect a positive response from them. They charge a premium as they are exposed to a greater amount of risk. A personal loan with a low CIBIL score is a blessing for creditworthy borrowers who just had a bad shot at the credit score. But even though this option is available, one should monitor the CIBIL report regularly to catch the errors in time and get them rectified.

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