There can be an inconsistency in your credit report that could be the result of any mistake that was either done by the agency or if you may have provided any incorrect information. A mistake on a credit report may have a negative influence on the CIBIL score. You must discover and correct any inaccuracies in your credit report because they can affect your creditworthiness. When you notice an error in your credit report, you should notify your lender and file a dispute. By not informing the credit bureau that error will remain in your credit report and would cause a negative impact. Sometimes, there can be an error in your credit report without your knowledge and can result in a low CIBIL score. Therefore it is advisable to check your credit score and report regularly in case of any irregularities in your report.
Errors in a CIBIL Report
Certain forms of inaccuracies in your credit report may arise and reduce your CIBIL score. Some of the most typical types of inaccuracies that can arise in credit reports are as follows:
Mismatch in Account or Personal Information
Typos in an address, a birth date, or a spelling mistake in a name are all common mistakes that can be corrected.
Wrong Account Tagging
An account that you don’t own might appear on your credit report. This can be due to any clerical errors or this can be a case of illegal identity usage.
DPD (Days Past Due)
If DPD shows anything other than ‘000’ or ‘XXX,’ your payment is past due. If you paid the payment but DPD still indicates an amount larger than ‘000,’ the lender or credit bureau committed an error. Simply fill out an online dispute resolution form to correct any mistakes. After confirming it with the original facts, the credit agency will remove the inaccuracy. When checking your credit score, make sure you submit accurate information.
Closed Account Error
Even if you’ve paid off your credit card, this error may still appear on your credit report. In such a case, the lender is most likely to not inform the CIBIL bureau. Locate the closed account on your credit report to remedy this error. Also, you can contact your lender to see if the account cancellation was submitted to the credit bureau. If the account has not been cancelled, supply the essential information and request a No Objection Certificate (NOC). When the bureau receives updated data, it will be removed from the report.
Common Misconceptions about CIBIL Score
Some of the most common misconceptions that people have about lowering CIBIL score are as follows:
Never asked for Credit
If you don’t have a credit history, banks will have to conduct a more thorough investigation to assess your trustworthiness and repayment capabilities. As a result, banks would take extra caution while reviewing your loan application. It is advisable to avoid credit, especially if you do not utilise it for any of your financial demands.
Applying for Multiple Credits
You may be tempted by all the attractive credit card offers and would want to apply for credit cards and small loans. However, applying for multiple credit cards or loans at the same time is not a good idea as credit bureaus might think that you are credit hungry and you are trying to develop credit quickly. As a result, when you run a credit score or CIBIL score check, your score will fall.
Beneficial to overuse Credit
When you exceed a credit card’s limit, your credit utilisation ratio rises (this is the ratio of credit card balance to your existing credit limit). It is best to keep the ratio as low as possible. Your credit score may suffer if you choose to increase your repayment commitments.
Your Guarantor’s Score Will Continue to Rise
You might have agree to be a guarantor on someone’s loan application. It can be for a friend or family member, but this could harm your credit score in two ways. Because if the borrower would default on repaying his loan, or if you are financially committed to meeting the guarantee’s obligations, your credit score can also take a hit.
Because credit cards are unsecured loans, some of you may be prepared to close an old account. As a result, your credit score may suffer. Indeed, you might broaden your borrowing alternatives by utilising an existing credit card account with a strong payment history.
These are some of the common errors and mistakes that are associated with CIBIL Score or credit score in India. However it is advisable to make a CIBIL Score login, in order to be aware about your score and credit reports. As a result, there would be less chances of having an error in your credit report that can lower your CIBIL score.