Is CIBIL Worthy? Faulty Credit Scores Upset Borrowers

CIBIL is a one of the four credit bureau company that has been licensed by RBI to function as a credit information company. It provides and maintains a record of credit history of individuals and businesses. It generates a credit score based on your past payments, current loans and dues, credits availed. This credit score is a three digit number ranging from 300 to 900 and is considered by lenders to assess your credit worthiness before they approve your credit application. A good credit score opens the options of getting loans approved easily and quickly with reasonable rate of interest. On the other hand, a bad credit score can give a hard time to a borrower. As a borrower you must check your credit report regularly to detect if you have a faulty credit score. A faulty credit score will upset you as it will lower your credit worthiness. Getting the credit reports with errors rectified needs time and patience on behalf of the borrowers. Most loans get approved on the basis of the CIBIL score of the applicant.

The four licensed companies to provide credit information in India are Credit Information Bureau Limited (CIBIL), Experian, Equifax and Highmark.

Knowing About Your Faulty Credit Score

A faulty credit score can be a result of any incorrect entry or a mistake in your credit report. As a result you may have a bad credit score. If not taken into account, this can prove to be a hazard for your loans getting approved. Some common mistakes seen and reported by customers are as follows:

• Errors in your personal details like name, address, phone number or PAN number
• Incorrect employment or account related information
• Mismatch in the loan amount due to loan repayment in terms of EMIs or part payment not getting reflected in the credit report
• Loan closure not stated by the bank to the credit bureaus or wrongly stated as ‘settled’ or ‘written off’ in the credit report
• An unknown loan mentioned against your name. This may be due to typographic error or identity theft.
• Despite all payments paid on-time by you, the report shows delayed or due payments
• A credit account which is still open may be displayed as closed in the report
• Incorrect display of balance in your bank account or credit limit for your credit card
• Incorrect dates of opening and closing a loan account

How To Rectify Faulty Credit Score

Regularly checking your credit report for any erroneous data entry can prevent you from a faulty credit score. You should check your credit report once every two to three months or at least three months prior to availing any loan or credit.

You should check for any mismatch in your personal details like account number, PAN number, name, or wrong entry of loan amount, type of credit etc. You should also check or any incomplete or an unknown information about your payments in the credit report.

In case any discrepancy is found in CIBIL report, it can be notified by raising a CIBIL dispute resolution request. Those who are registered on CIBIL can directly raise the request by logging into myCIBIL. The following steps should be followed to raise a dispute regarding discrepancies in CIBIL report:

• Login to ‘myCIBIL’
• Click on ‘Raise a Dispute’ tab
• Select a relevant section that you want to dispute
• Select your account
• If you are disputing over ownership or duplicate information, select the same on ‘Dispute Type’ and submit the details of the dispute in brief
• If you are disputing a data inaccuracy, enter the correct value for the disputed field and submit

Impacts Of Faulty Credit Score

• High Interest Rates – A faulty credit score can put you through as a risky borrower with a bad or low credit score. The lenders might lend you a loan or credit with a high rate of interest. As a result, you will end up paying more money over a period of time as you would have with a good credit score.
• Rejection of credit applications – Some lenders though are willing to take certain risks still they might reject your loan application on the basis of your low credit score.
• You may not be able to avail the benefits and rewards associated with your credit cards

How To Improve Your Credit Score

• Timely payment of dues for your EMIs and credit cards. You should make full payment of these instead of minimum amount due.
• Keeping your credit utilization ratio low. To assist you in this you may request your bank to increase your credit card limit.
• Maintaining a healthy credit mix by having a right combination of secured and unsecured loans and credit cards.
• Keeping your old good accounts opened so that lenders can gain knowledge of your repayment capacity in the past.
• Checking your credit report frequently to eliminate the chances of any incorrect information being recorded related to your personal details or payments and loans.

Importance Of A Good CIBIL Score

• Credit approvals for your loans and credit cards will be easily and quickly granted
• Lower rate of interest will offered by banks and other financial institutions on any type of loan
• Lenders will offer a wide variety of loans and credit cards to compare and choose with additional benefits.
• You are considered to be financially more secure as compared to those with low credit score because you can avail the benefits of the credit products when needed.

Conclusion

CIBIL score holds a lot of importance as it makes your life financially secure. A higher credit score gives you the power to choose from various credit products when needed. Faulty credit score can be detected by regularly checking the credit report once every three months. Request to raise any dispute in the CIBIL report can be done by logging into ‘myCIBIL’.

IIFL Finance helps provides a detailed analysis of your credit behaviour and fetches your CIBIL score instantly and for free. IIFL Finance also provides expert tips to improve your credit score. It also provides exciting personalised loan offers based on your credit score.