Credit bureaus aggregate the credit information provided by various banks and financial institutions on a monthly basis and records them in an individual’s credit report. This report has a complete history of your loan and credit card repayments, account usage and outstanding balances. It serves as a basis for the calculation of the credit score. Since banks use credit score and credit report to assess the intent and capacity of a loan applicant, it is necessary for every individual to ensure that the information in the credit report is up to date and accurate.
It is likely that the data reflecting on your credit report is not accurate or not up to date. The bank may have missed sharing all updates on your loan account with the credit bureau. Even if the bank has reported data properly, the credit information company may have missed updating or is yet to update it in your credit report. Such errors or misses on your credit reports can lower your credit score, which could hurt your ability to get new lines of credit or even make the terms of credit more expensive for you. Ultimately, these errors could be costing you money and may force you to postpone your aspirations.
You can begin reviewing your credit report by getting a copy of it yourself from the website of any of the four credit bureaus in India. Checking your own credit report or credit score doesn’t impact your score, so check it without any worry. Further good news is that you can request a free copy of your credit report once in a calendar year from any of these four RBI approved credit bureaus. And if you find errors, you can dispute the errors at no cost to you. Read more about How and When to Dispute Your Credit Information Report here https://blog.crifhighmark.com/how-when-to-dispute-your-credit-information-report/
Once you get your credit reports, review them carefully. You can use the list below to check for common errors and make sure your credit reports are accurate and up to date.
Are closed accounts still open?
A closed account means you have positively paid back all the loan or credit card dues, and the account is not going to see any future activity. While an open account is an indication that you still have some amount to be paid back or you have the credit line still available to you for use. Having old lines, those which should have been closed otherwise, on your credit report showing as open will show higher number of lines and higher credit amount available to you. This can impact your credit score and therefore your eligibility for a loan. So, if the closed accounts are being shown as open, it is time you report this error with documentary proof so that you can get it rectified at the earliest.
Are all accounts up to date?
Do check the last reported date on all your accounts. If the account is marked closed, the last reported date will be same or closer to date of closure. If the account is marked open, the last reported date should be within last 30-60 days. If any of the records are not updated, contact the credit bureau as well as the bank concerned. An out of date record will not present correct picture to another bank and may also impact your credit score.
Is there an account that does not belong to you?
If you notice any credit account under your name that you are unaware of, report immediately and get it removed from your credit report. This could be because of wrong reporting by the bank or an error at the credit bureau. Take it up with the credit bureau, and it will help you get it resolved.
Is there a record of an account being shown as delinquent?
Delinquent accounts are those accounts which are way past their dates of payment. Typically, delinquency is reported as number of days past due date (DPD) which are shown for last 36 months for every credit line. For credit card accounts, delinquency is reported when the minimum amount due is not paid. Lenders might give you a leeway of a few days before reporting the delinquency. More than 3 months of missing repayments will automatically declare your account as NPA (non-performing asset or non-performing loan). Such accounts can bring a major drop in your credit score and distrust in the eyes of all the lenders. If any account is showing overdue or delinquent (if more than 30 days), review them more carefully. If you have already made the repayment, you must inform the bank to report it to all credit bureaus as well.
Is the same debt being recorded more than once?
Did you know that 30% of your credit score is made of the debts you have taken? The number of debts you have taken matters a lot when it comes to your credit score. More debts in your name will result in difficulty in getting further credit. If your loan account or credit card has been reported twice then you will have fewer opportunities to avail credit. It is also likely that while 2 credit lines are shown, only one is being reflected with good credit history and another one as delinquent. Make sure to check your credit report every time you take a loan from the bank so that there are no such errors on your report.
Is it about incorrect credit limits?
To maintain your credit score, the credit utilization ratio should be a point of significance to you. When it goes high it shows an individual’s higher dependence on credit. Makes sure the credit limit on your credit card is accurate and not lower than the actual limit. Report to Credit Bureaus like CRIF to rectify in case if it is reported wrongly.
Incorrect balances in your loan accounts?
If a higher outstanding balance than actual is shown, you may lose out an opportunity to avail credit since the bank may assume you to have higher credit available with you than actual. Make sure correct loan account balances are reported in your credit report.
Are there any Identity Errors on your report?
Identity errors may lead to many more errors on your credit report and credit score. These occur because of wrong information reported by the bank, the mismatch between PAN and your name or due to identity theft.
• Wrong Information: When there is a mix-up in two customers at the bank end or at the credit bureau end, loan and credit card information pertaining to some other person may have been reported against your name. The mix up could be due to same phone numbers, or mix-up in PAN or similar names/addresses etc.
• Mismatch: This could be particularly possible if you have undergone a name change in your PAN account or use different forms of a name like only with initials for certain accounts and expanded forms in other accounts.
• Identity Fraud: Fraud on your report is the most serious concern. Fraud means that someone is using your personal information to open accounts in your name. If you suspect identity fraud on your report, you will need to alert the bank concerned and the credit information company. Once it is established as a fraud, it should also be reported to the local police.