CIBIL Consultancy
Anyone looking to obtain any kind of credit just cannot avoid knowing about credit score or credit report. There is a lot of awareness built around the subject and individuals are increasingly keeping themselves updated of their credit scores.While you understand the importance of credit score, it is very important that you know what contributes to your credit score. These are the factors that contribute towards a good or bad credit score.
  • Your borrowings - Loans and Credit Cards
  • Your Repayment History
  • Credit Mix - Proportion of Secured borrowings to Unsecured borrowings
  • Credit Utilisation - Proportion of your credit limit that is used
  • Number of Hard Inquiries
When you apply for a credit, your lender will inquire with the credit bureau with your PAN and gets your credit report. A credit report is nothing but a detailed report that demonstrates how you have performed on each of the above-mentioned factors. Credit scores and credit reports are dynamic in nature. They can change with each of your action, like a payment made or default in payment, a fresh loan or hard inquiry, etc.
You may be taking good care of your credit and taking positive steps towards building a good credit score, but did you know that your credit report may have certain errors and these errors may be silently pulling your credit scores down?

How to Correct Error in CIBIL Score  and CIBIL reporting ?

Obtain your credit report and check for errors:

While you might think you have a good credit history, there might be certain reporting errors that are unnecessarily dragging your score down.

One of the My Client Piyank Patel  (Virtual Name) has face many problem issue of CIBIL, there are showing many of the loan which are not knowing or not himself someone else loan shown in his credit report , there are almost 50 account are the account not belong to him . However In Experian , Equifax and CRIF Highmark , There are no any kind of inaccuracy shown in Report . Only CIBIL Shows inaccuracy and Bankers are saying that we believe in CIBIL Score  and Reporting .

Client came to my office , firstly I didn’t  believe more this much account can’t be possible by all financial institution and bank gave wrong reporting . But when I approach to purchase detail report and We create one excel sheet for those accounts are not belong to him, We investigated the bank and financial Institution who is the beneficiary owner of the account , we found that many of the account belong to someone else, We approach bank branches to delete the entry from CIBIL . They call approach Head Office or CIBIL Dispute Resolution.

We write dispute with CIBIL , CIBIL see the dispute and processing of verification of the account , right now All Account which is not belong to him already deleted.  Because there is more than 50 accounts there is take 4 month to verify the account.

How Dispute Process By CIBIL Or Credit Bureau Process . Power By Transunion CIBIL LIMITED.


Many time Account has been closed even though CIBIL Shows Active account showing Current Balance , Account Overdue and written off / settled even though account has been closed .

We also filed dispute with CIBIL.

Types of Inaccuracies

Inaccurate Current Balance or Amount Overdue
On purchasing your CIR, you may notice that your ‘Current Balance’ or ‘Amount Overdue’ may not be updated for your most recent payment. This is usually the case if you have purchased your CIR within 45 days of making a payment. Credit institutions generally submit the data concerning last payment of dues/ EMI within 45 days, so the latest payment may not reflect on your CIR until the data is submitted by that lender. However, if the ‘Date Reported’ (the date the data was reported to us) associated with that account was over 2 months ago, you can write to us to update this information.

An inaccurate ‘Current Balance’ (especially on the high side) implies that you have more debt than you do. ‘Amount Overdue’ indicates that you are unable to service your existing loan obligations. Both are viewed negatively by lenders and may affect the chances of your loan approval.

Incorrect Personal Details
Credit information is submitted to us by various Banks and Financial Institutions. Each lender submits your credit account along with your personal information such as name, address, date of birth, PAN, etc. We then use the personal information to collate these details into a single CIR which provides your complete credit profile.

Ensure that you have provided accurate and updated details to your CI at the time of your loan application. In addition, every time your personal details change or are updated you should inform your bank or financial institution so that they are able to make the necessary changes to their database.

Ownership
If any personal details or one or more of the accounts on your CIR do not belong to you, you should initiate the Dispute Resolution Process as detailed below.

Overall, the best solution is to check your Credit Score and CIR before you apply for a loan so that you know your lender is evaluating your loan application based on accurate data. If you notice any inaccuracies in these documents, please follow the simple steps below to initiate and complete the Dispute Resolution Process.

Pankit A Shah


CIBIL IMPROVEMENT PROCESS
 
We would like to categorize these errors under 3 broad categories:
Identity Errors
Errors due to wrong PAN
Correct identity is the base of any information. It may be possible that there is a mix-up in PAN numbers. When there is a mix-up in PAN numbers, loan and credit card information pertaining to some other person may be shown against your name.
 
Errors due to mismatch between PAN and your name
It may also be possible that there is a mismatch between your PAN number and your name. This could be particularly possible if you have undergone name change in your PAN account or use different forms of name like only with initials for certain accounts and expanded forms in other accounts. It could also be a mechanical error caused during reporting by your lender.
 
Errors due to Identity Theft
The above-mentioned errors are mostly oversight or mechanical errors. However, error due to identity theft is graver in nature. When you come across these kinds of errors, it means that someone else has fraudulently used your identity to obtain some form of credit. You might have been a victim of cybercrime too. When you come across situations of identity theft, it is important for you to analyse how and where your identity might have been stolen. It is necessary that you change your passwords immediately and also report the same to the Cyber Cell of the Police Department.
 
Account Errors
One of the main components of your credit report is your credit accounts, which contains all the loan and credit card accounts owned by you. The credit report also shows those accounts that are closed. Following are the account errors that may be there in your credit report.
 
Inaccurate Accounts Under Your Name
It is possible that accounts that you do not remember opening are shown as open under your credit report. This may be rare for loan accounts but is quite common for credit cards. Before the introduction of KYC norms, there have been instances of credit cards being issued to individuals without proper documents or solicitation.
If you notice such accounts under your name, it is good to get them closed after reporting the error.
 
Closed Accounts Being Shown as Open
Your credit report also shows accounts that are closed. A closed account conveys that you have satisfactorily paid back all the loan or credit card dues. While open accounts mean that there is some outstanding in the account and you need to pay that off. An open loan account which is way past its due date is a big red flag that can signal your future lenders that you are unfit for further credit.
If closed accounts are being shown as open, it is time you reported this error with documentary proof so that you can get it cleared at the earliest.
 
Accounts wrongly being shown as Delinquent
Delinquent accounts are those accounts which are way past their dates of payment. Typically, delinquency is reported at 30, 60, 90 and 120 days past the payment due date. For credit card accounts, delinquency is reported when even the minimum amount due is not paid. Generally, lenders give you a leeway of a month or two and try to remind you with an email/phone call. Only past this period, an account is reported as delinquent.
When an account is being shown as delinquent inadvertently, it is a grave error. Because a delinquent account could lead to a 100 points drop in credit score. Also, no lender would like to lend to an individual with a delinquent account.
 
Same debt being reported more than once
The number of debts in your account matter a lot to your credit score. The more the number of debts without corresponding income will result in difficulty in getting further credit.
Similarly, if a debt is reported twice, it will give you fewer opportunities to avail credit. It might also be possible that while 2 debts are shown under your account, only one is being shown as serviced (the one you are actually repaying) and the other may be shown as delinquent. Though this error may be a result of wrong reporting, it can have serious consequence. Errors of this sort might be easy to clear off but make sure you do it at the earliest.
 
Accounts with incorrect credit limit
Credit limit associated with credit card is an important determinant of your credit utilization ratio.
Credit Utilisation Ratio = Amount Spent on Credit Card / Credit Limit on your Credit Card
When your credit report shows a lower credit limit than actual, you are at a risk of your credit utilisation ratio being reported as high, which is a point of concern. If your credit limit is being wrongly reported, make sure you bring it to the report it to the credit bureau and get it rectified.
 
Accounts with Incorrect Balances
Incorrect balances on your loan account may land you in trouble. If a higher balance than actual is shown, you may lose out an opportunity to avail credit in future. It may also end up showing your account as overdue. Make sure correct loan account balances are reported in your credit report.
 
Main Effects of a Bad Credit Score
Rejected Loan /Credit Card Applications
Your credit score is one of the first and foremost things that is taken into consideration when you apply for any loan. Of course, other factors like your income, other loans being serviced, and employment status also matter while considering a loan/credit card application.
However, your credit score is considered as a direct indicator of your creditworthiness. As mentioned above, it also signals your likelihood of repaying the loan. So, no lender would like to lend to an individual with a bad past of dealing with credit. This would be surely be the case when you approach traditional lenders like the banks.
The cost of rejected credit may end up having other manifestations. For Ex: You decide to pursue higher education from a foreign university, but your Education Loan ends up getting rejected, throwing your plans out of gear.
Additional Reading: How to Get an Education Loan with Bad Credit?
 
Higher Rate Of Interest
While some lenders may outright reject your application, there may be a few lenders who may still offer to lend to you inspite of a bad credit score. To compensate for their increased risk in lending to you, they may agree to lend at a higher rate of interest.
You may be under the impression that a percentage or two of higher rate of interest does not matter much. You may be right if it is a very small amount of loan with shorter tenures. However, when you consider bigger loans like the car or home loans, a percentage or two higher also matters a lot.
Ex: On a Car loan of Rs 7 lakhs availed at the rate of 10% for 5 years results in an EMI of Rs 14,872 while the same at 12% interest results in an EMI of Rs 15,571/-. When considered over the entire term of the loan, you end up paying Rs 42000 extra in EMI.
 
Loans On Unfavorable Terms
While some lenders may agree to lend at a higher percentage of interest, some others may agree to lend, but at terms which may not be favorable to you. These may end in different forms.
The approved loan amount may be much lower than what you actually applied for, which would again create unnecessary hassles for you in terms of arranging the rest of the amount. A shorter tenure may be approved. A short tenure with the same amount of loan would mean higher EMIs, which may prove to be a strain on your budget. A bigger down payment may also be demanded to approve your loan.
On the other hand, you may be approved a Prepaid Credit Card or Credit Card against a Fixed Deposit, both these may not solve your purpose of owning a credit card.
While the above-mentioned effects are directly related to your bad score and your future credit prospects, there can be many more which may come across as side effects of a bad credit score
 
Side Effects of a Bad Credit Score
May Affect Your Employment Prospects
Though not in popular practice yet, increased number of employers are asking credit reports of candidates during job interviews. This is especially true for sectors like financial services, insurance, telecom and regulators like the SEBI or the IRDAI. A bad credit score often acts as a deterrent as the individual comes across as a financially undisciplined person. It is also thought that a bad credit score means a debt trap and an individual may not be able to focus much on the job at hand due to debt resolution. Though you may have genuine reasons for a bad credit score, it is better to be on the good side as you may not get a chance to give your explanation.
 
Starting Your Own Ventures May Be Difficult
These days, everyone looks at being an entrepreneur and starting a business on their own. However, as great an idea may be, it requires funds for execution.
After bootstrapping, the first line of credit anyone looks for is from your existing banker.
With a bad personal credit score, your existing banker may not like to take risk on you venture. Approaching other sources of credit may prove more expensive for you.
 
More Number Of Hard Enquiries
With a bad credit score, you may need to apply for credit more often to fulfill your need, with unfavorable terms of credit adding to your woes. Each time you apply for credit and your lender pulls out your credit report from the credit bureau is considered as a Hard Enquiry.
Each hard enquiry, irrespective of the fact if the credit is approved or not, takes your credit score further down (although if you make consistent repayment of the credit approved, your credit score will increase). So, a bad score only gets worsened.
Additional Reading: Top 10 Tips to Improve Your Credit Score
Emotional Distress
Barring a few individuals, most of us apply for credit when we need it. Credit rejection when you need it the most causes financial distress, which in turn contributes to emotional distress too.
We would also like to stress on the fact that bad credit scores do not have any quick fix solutions, it takes anywhere from 6-12 months of responsible behavior toward credit to see your score move up.
Key Takeaway
For people like Jitesh, we as your Credit Coach would like to implore that a bad credit score affects you in more than one way, knowingly or unknowingly. So, we advise you to maintain a good credit score and lead a financial distress free life always.
 
 
 
 
     
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