Credit Report Errors: How to fix mistakes and avoid loan rejection – A complete guide | Mint

A good credit score is one of the pre-requisites for obtaining a loan. The credit score is mainly dependent on your credit report. But what happens if your loan application is rejected due to inaccuracies and outdated data on your previous loans in your credit report?

The decision to grant a loan entirely depends on the credit policy of the lender. They rely primarily on the credit score provided by credit information companies (CICs) such as TransUnion CIBIL to arrive at the decision. But sometimes such information is either not updated or has errors. In such cases, you have to follow a clearly defined procedure for correcting the mistakes in your credit report. Here is a guide to correct inaccuracies in the credit report.

What are the likely inaccuracies in a credit report?

Incorrect personal details and inaccurate account information are the major defects that appear in a credit report. Lenders usually submit details of your credit account along with your name, personal contact number, address, date of birth, PAN (Permanent Account Number), employment and income. Companies such as TransUnion CIBIL create your credit profile in the ‘Credit Information Report (CIR)’ based on these details. 

“Hence, it is important to update your credit institution every time there is a change in the information as incorrect details may lead to a wrong CIR being generated,” according to TransUnion CIBIL.

You have to regularly check your credit report, which is typically generated once a month or every 45 days, for typographical errors that include your name being misspelled, wrong address or date of birth and other clerical mistakes. These mistakes can lead to identity confusion. Both significant and insignificant errors on this front will reflect adversely on your credit report/score and could result in the rejection of your loan application.

When loans, which have been fully closed, are not updated by lenders, it will not carry the positive effect of you being a responsible borrower and also not improve your credit score. There may be ownership mistakes wherein the credit accounts or loans included under your name actually do not belong to you. This will adversely affect your credit score and the chances of getting a loan.

How can these errors be rectified?

If a closed credit account is still listed as open, you must report it to the lender at the earliest. You should provide all the necessary details to the lender, who in turn will update the same with the CIC. Once it receives the information, the CIC will make the necessary changes to the credit report to reflect the latest status. India has four CIC’s—TransUnion CIBIL, Equifax India, Experian India and CRIF High Mark.

“As per the Credit Information Companies (Regulation) Act of 2005, CIBIL cannot modify any information in the database without confirmation from the relevant credit institution,” TransUnion CIBIL said. Credit institutions usually submit data every 30-45 days to companies such as CIBIL. If you purchase your ‘CIBIL Score and Report’ within 45 days of closure/pay-off of your accounts, it may not be updated in CIBIL records.

But if the data submitted by the lender for the account is more than two months old and the payment has still not been updated, then you can raise a dispute with CIBIL. You can also file a complaint directly with CICs such as CIBIL if the credit account does not belong to you.

How can a dispute be raised with credit information companies?

The following are the steps for dispute resolution.

Step 1: Go to www.cibil.com or the relevant CIC to create an account. If you already have an account, you have to simply sign up. Then, download your credit score and report.

Step 2: Go to the ‘Credit Reports’ section. Navigate to the ‘Dispute Centre’ tab and click on ‘Dispute an Item’.

Step 3: Select the relevant section that you want to dispute.

Step 4: Enter a value for the disputed section if the dispute is monetary in nature.

After this, the system will validate the dispute and assign it to the respective lender. Once the dispute form is submitted, CICs will verify the information with the lender. The status of the dispute would be usually updated by CICs in a month.

What happens next?

In order to register a dispute, you have to first find the inaccuracy. Your credit report should have areas that are marked as ‘Under Dispute’. If the lender acknowledges the dispute, the credit report is corrected. CICs will then inform you about the same.

But if the lender rejects the dispute, CICs will inform you and no modifications will be made in the credit report. Finally, your credit record will be updated without the ‘Under Dispute’ designation.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.