HOW TO FIX AN ERROR IN YOUR CREDIT REPORT

For availing a loan and getting a better interest rate, one significant parameter on which the borrower’s loan application is judged is the credit report. The credit report reflects your repaying capacity. Now imagine what happens if a small data entry mistake completely changes the result of your report! Well, sometimes these mistakes like wrong date of birth, address etc. are inconsequential but if let’s say the date of payment, account status, date of loan closure, etc are wrongly mentioned, then it can lead to a poor credit score and thus, rejection of loan application or even blacklisting by the lending institutions. So, it is important to regularly check the credit report, find the discrepancies and resolve the disputes.  

What are the common errors that take place?

• Wrong personal information: Many a times, you will find that your name is spelled wrong, or the middle name is missing. These mistakes could lead to swapping of loan details with a person who has a similar name. Always make sure that the entries are consistent with your full name and its spelling in all loan-related documents. Also review your address, identity number (PAN, Aadhar), gender and date of birth on the report.
• Insufficient credit file: This may happen because your credit file fails to reflect all your credit accounts. Sometimes, creditors miss out on supplying information to the credit bureaus. In such a case, ask the creditors to send updated credit information to credit bureaus, or consider moving your account to a different creditor who does it on a regular basis.
• Clerical errors: These are mistakes made while wrongly reading or entering your name, address or any other information while reading from a hand-written application.
• Incorrect payment status: Mismatch of account details or reporting the same account twice can lead to your own account showing higher debt than there actually is.  
• Outdated information: When your accounts do not reflect the debts that you have settled, the credit score could be poor. So, whenever you repay a loan, don’t forget to take a closing report as it will come in handy as evidence. After seven years, credit reporting companies are supposed to remove all the history of bad debts from your report. Similarly, if you got divorced recently, make sure that your former spouse's debts are not shown in your report. However, it is important to note that while some errors are genuine, there are also discrepancies because of the time lag between the collection/submission of data and updating it.

How to fix credit report errors?

1. Check your credit report: There are credit reporting agencies in India like CIBIL, Experian, Equifax, and Crisil Limited. The individual must request for a copy of the credit report from them.

2. Review and find the errors: Once you have the details, check if the information is accurate or not.

3. Gather your evidence: Keep documents ready that prove your name, address, and other credentials as well as closing reports that prove that the debts were settled. You must have the facts ready as to why you dispute the information on the report and are requesting for its correction or deletion. It is advisable to enclose a copy of your report with the disputed information circled.

4. File a dispute claim: Now you have to contact both the credit bureau and the organization that provided the information to the bureau. Most agencies have dispute resolution forms on their websites. Send letters by certified mail and request for a return receipt as verification that they have received your correspondence.

5. Wait for response: Both the credit bureau and the credit reporting agency may take anything from 30 to 90 days to investigate and verify your claim. However, if either of the agencies decides that your dispute is “frivolous”, the claim can be rejected immediately mentioning the reasons. But if all your proofs are in place, the credit bureau will provide you with the results of the investigation in writing along with a free copy of your updated credit report after resolving the dispute. However, if you are still not satisfied with the result, you can re-file the complaint after some time.

A small error in your credit report can have several negative repercussions and thus, any discrepancy should be immediately resolved. It may take time, energy and patience to get the misinformation corrected but it is worth the effort because any significant improvement in your credit score will lead to quicker loan approvals and better interest rates. Also, do not wait till the discrepancies ruin your application. Instead stay vigilant and keep checking and correcting the record regarding your credit report regularly.