How Can I Remove Loan Inquiry From Cibil Credit Report
Get the know-how to remove loan inquiries from CIBIL credit reports. Follow the steps and keep in mind the process to remove inquiries impacting your credit score.” Is this what you were looking for?
The ability of a borrower to leverage credit and loans from registered financial institutions and banks depends to a large extent on their credit score. The credit score is very often referred to as CIBIL Score in India. CIBIL is one of the four credit rating agencies authorised to operate in India. Your CIBIL credit report, or any credit report, for that matter is therefore extremely important if you need to approach a lender for a loan or a credit card. This is especially so in the case of unsecured loans like Personal Loans and products like credit cards. In general, you require a credit score of 750 or more in order to take an instant loan and loans without any collateral. Getting an instant loan for low CIBIL score rated individuals is extremely difficult. Usually those with low CIBIL scores need to apply with a co-borrower or pledge an asset as a collateral. In addition, the lower your credit score, the higher is the interest that lenders will charge you on their loan products.
It is therefore important to check your credit score from time to time to ensure that your credit score is an accurate representation of your credit worthiness, even though you may not be contemplating a loan. This is so because improving your credit score takes time. So does rectification of any errors in your credit report.
What is a CIBIL Inquiry?
A CIBIL Inquiry occurs whenever you apply for a loan or credit card in India. It essentially represents a record in your credit report that a lender has accessed your credit information to assess your creditworthiness. This inquiry can be viewed as a formal investigation into your credit history to determine your eligibility for the loan or credit card.
Factors Affecting Credit Score:
Your credit score is affected by the following:
- Regularity of loan and credit repayments
- Debt to Income (DTI) ratio
- Hard Enquiries against your credit report
This blog especially looks into the aspect of hard enquiries against your credit report and whether it is possible to remove them. To begin with, a hard enquiry is when a lender makes an enquiry regarding credit score, your debt levels and repayment patterns from the credit rating agencies. This happens when you apply to a lender for a loan or a credit card on your own steam. This is done to assess the level of risk involved in giving you a loan or a credit card. The lower your credit score, the higher is the risk assessment. A hard enquiry is to be distinguished from a soft enquiry. The latter is generated when you check your own credit score, or when lenders ask for a broad overview of your credit report as they may do to shortlist potential customers to whom they can offer credit cards and loan products on their own accord. While a hard enquiry impacts your credit score negatively, a soft enquiry does not have any effect on your CIBIL Score.
Removal Of Loan Enquiry From CIBIL Credit Report:
There are only two occasions when you can remove the trace of a hard enquiry by a lender from your credit report. The first is if there is an enquiry against your credit report without authorisation by a lender, i.e., if a lender has made such an enquiry without you having approached it for a loan. The second is if there is a mistake during data entry on the part of the credit rating agency.
If you do notice such an error on your credit report, you should write to the credit rating agency as soon as possible pointing out the error and asking for a rectification. If the error is from the credit rating agency’s side, rectification will be a quick process. However, in case of an unauthorised enquiry by a lender, the credit rating bureau will have to write to the lender to seek a clarification before making any changes in your credit report. This process could take up to 45 days or more.
To raise a request for removal of an erroneous hard enquiry from your CIBIL report, you need to visit the “Dispute Resolution” section of the company’s official website and click on the “Consumer Dispute Resolution” tab and follow the instructions given.
However, if the loan enquiry is genuine, the enquiry will be reflected on your report for at least a year. Your credit score is also lowered and remains affected for at least two years. In such a case, the only way to counter the low score is through extremely credit-worthy behaviour such as paying EMIs and credit card bills on time, and keeping your debt-to-income ratio within 30%. By doing this consistently, you should be able to pull your score up to an acceptable level over time.
Removing loan inquiries from your CIBIL report is only possible for unauthorized inquiries or errors. Here's what to do:
- Obtain your CIBIL report: Identify any suspicious loan inquiries.
- Gather Proof: Collect documents like loan rejection letters if applicable.
- Dispute the Inquiry: Visit the CIBIL website's "Dispute Resolution" section and follow the steps to register your complaint.
- Track the Dispute: CIBIL will contact the lender for clarification. The process can take up to 45 days.
Remember, legitimate inquiries stay on your report for one to two years.
How To Check CIBIL Credit Reports?
By now the question uppermost in your mind must be “How to check my CIBIL score free of charge?”. To check your CIBIL Credit Report, you can visit the website of the company at https://www.cibil.com/freecibilscore. Click on the tab “Get Your Free CIBIL Score”, and fill in the details required. Most credit ratings bureaus in India offer this as a free service. You could check their website for your report and register any grievances you have if you feel your credit report and score is erroneous.
Thus, if you are looking for a loan, do check your CIBIL score first. If you have a score of 700 or more, you can apply to IIFL for a personal loan or business loan without any collateral. The process is online and once you have submitted the application and the supporting documents, review of your application will take place within one working day.
How to increase your Credit Score?
Here's how to improve your credit score:
- Review and Pay Bills On Time: This is crucial. Late payments heavily impact your score. Set up auto payments or reminders to ensure timely payments.
- Manage Credit Utilization: Keep your credit card balances low. Aim for a utilization rate below 30% of your credit limit. This shows responsible credit usage.
- Address Errors: Obtain your CIBIL report and check for mistakes. Dispute any errors promptly to maintain an accurate credit history.
- Build Credit History: If you have limited credit history, consider secured loans or become an authorized user on someone else's credit card responsibly.
- Maintain a Credit Mix: Having a healthy mix of secured loans (e.g., car loan) and unsecured loans (e.g., credit card) demonstrates your ability to manage different credit types.
Impact of a Hard Inquiry on Credit Score
- Short-term Dip: A hard inquiry can cause a small decrease in your credit score, typically less than 5 points. This is because it shows lenders you're seeking new credit, which might suggest a higher risk of borrowing heavily.
- Temporary Impact: The negative impact of a hard inquiry usually only lasts for about a year. As time passes and your responsible credit habits are reflected in your report, your score will recover.
- Multiple Inquiries: While a single inquiry has minimal impact, numerous hard inquiries within a short period (like a few months) raise a red flag for lenders. This could be seen as a sign of financial strain and hurt your score more significantly.
Why does a Credit Score Drop After a Hard Inquiry?
A temporary decrease in your credit score after a hard inquiry arises from the concept of creditworthiness. When a lender initiates a hard inquiry, they access your credit report to evaluate your financial history and ability to repay potential loans. This inquiry indicates you're seeking new credit, which could suggest an increased likelihood of needing to borrow more money. From the lender's perspective, this might elevate your risk profile, leading to a slight decline in your credit score.
It's important to remember that the impact of a hard inquiry is short-lived. Credit scoring models typically only consider inquiries within a specific timeframe, often around one year. So, a single hard inquiry shouldn't cause a significant or long-lasting drop in your score. However, multiple hard inquiries within a condensed period can raise a bigger red flag for lenders, potentially leading to a more substantial decrease. This is because frequent credit applications might imply financial difficulties and a higher chance of missed payments.
How to Raise a Dispute with CIBIL to Remove a Loan Enquiry from Your Credit Report?
If you suspect an unauthorized loan inquiry on your CIBIL report, here's how to dispute it:
- Obtain your CIBIL report: Identify the inquiry in question.
- Gather Proof (Optional): Collect documents like loan rejection letters for support.
- Head online: Visit the CIBIL website's "Dispute Resolution" section.
- Follow the steps: Initiate a dispute for the inquiry, providing details and any proof.
- Track the Resolution: CIBIL will contact the lender to verify the inquiry. The process can take up to 45 days.
Tips to Prevent Your Credit Score from Decreasing After a Loan Inquiry
- Space Out Inquiries: While a single inquiry has minimal impact, avoid submitting numerous loan applications in a short period (a few months). This triggers a red flag for lenders.
- Pre-qualify Instead: Utilize pre-qualification options offered by lenders. These often involve soft inquiries that don't affect your score and give you an idea of loan eligibility.
- Shop Around Strategically: Compare rates and terms from multiple lenders, but aim for this within a short timeframe (weeks, not months) to minimize the number of hard inquiries.
- Maintain Good Credit Habits: Focus on the big picture! Timely payments, low credit utilization, and a healthy credit mix all contribute to a strong score, buffering the impact of a hard inquiry.
FAQ’s
Q1. Does a loan inquiry affect a CIBIL credit score?
Yes, a loan inquiry can cause a slight dip in your CIBIL score. This is because it shows lenders you're seeking new credit, which might suggest a higher risk. However, the impact is usually temporary and only a few points. Multiple inquiries within a short period can have a bigger effect, so it's wise to space out loan applications or utilize pre-qualification options to minimize inquiries.
Q2. Can a loan inquiry be removed from a CIBIL report within 24 hours?
No, removing a loan inquiry from your CIBIL report within 24 hours is not possible. You can only dispute unauthorized inquiries. This process involves the credit bureau contacting the lender, which takes time. Even for legitimate inquiries, they stay on your report for 1-2 years.
Q3. How to increase your CIBIL score after a loan inquiry?
While a loan inquiry might cause a small dip, focus on long-term credit health. Make all future payments on time and keep credit card balances low. This positive credit history will outweigh the inquiry's impact and gradually raise your CIBIL score.
Q4. How To Remove Inquiry From CIBIL?
You can't remove legitimate inquiries from your CIBIL report. However, if you spot an unauthorized inquiry, dispute it on CIBIL's website. They'll contact the lender to verify, but this process takes up to 45 days.
Q5. Can A Bank Remove An Inquiry From My CIBIL?
No, a bank cannot directly remove an inquiry from your CIBIL report. This applies to both authorized and legitimate inquiries you made. CIBIL works with the bank to verify the inquiry during a dispute, but the ultimate decision rests with the credit bureau.
Q6. How Many Credit Enquiries On CIBIL Is Okay?
There's no magic number for ideal CIBIL inquiries. Multiple inquiries in a short period (few months) raise a red flag. Space out loan applications and utilize pre-qualification options to minimize inquiries. Focus on maintaining a good credit score through on-time payments and low credit utilization.
Q7. How Long Will A Loan Inquiry Stay On My Report?
Loan inquiries stay on your CIBIL report for up to two years. However, their impact on your credit score is typically temporary, lasting around a year. To minimize the effect, space out loan applications and focus on building good credit habits like on-time payments.
Q8. How do I check my loan Enquiries?
You can't directly check just your loan inquiries on your CIBIL report. However, to see them, you can access your full CIBIL report. This report will list all inquiries, including loan inquiries, along with other details impacting your credit score.
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