How to Repair Faulty Credit Report/Score?

A faulty credit report or score can have a significant impact on your financial health and future credit opportunities. In this article, we'll provide essential tips and strategies for repairing your credit report or score!

24 Mar,2023 11:36 IST 2603
How to Repair Faulty Credit Report/Score?

Whether it is banks or non-banking finance companies (NBFCs), all lending institutions follow certain standard protocols for approving loan applications. Borrowers are picked on the basis of several factors, including their creditworthiness. This is done via an initial filter of a credit score.

The credit score, or the CIBIL score, is calculated based on the credit history of a person and lies between 300 and 900. The higher the score the better, denoting a higher probability of the person meeting his or her repayment schedule for any loans to be taken in the future based on the past behaviour. It is dependent on many aspects including whether the person has been repaying past loans in time, the type of loans—secured and unsecured—availed and if there is any default.

Sometimes, errors end up spoiling or pulling down the CIBIL score, though it happens rarely. The only way to make sure this doesn’t happen, and if does so is corrected soon, is by periodically checking the credit report and raising disputes for any incorrect notes.

This faulty marking could be due to a credit card company making an error and not updating a payment that was already made or a bank that incorrectly marked a default in payment for an equated monthly installment (EMI) or a NBFC that has, due to human or machine error, mixed up a loan account between two persons. These reasons could negatively impact the CIBIL score.

One should take heart from the fact that such errors can be sorted through a process and thereby make life easier in the future.

One can initiate a dispute online with TransUnion CIBIL, the company that provides CIBIL scores, for correcting such mistakes. If one so chooses, one can also approach TransUnion CIBIL at its Mumbai office for raising the dispute.

How To Repair Faulty Credit Report and Score

1. First Step:

The first step in the process to take the problem head on is to check the credit score report and identify errors. This should be a periodic affair, say once a year, to make sure everything is in order. In fact, it would ensure that one does not just catch an incorrect entry but also spot any actual missed payment for an old or existing loan that has affected the outstanding amount and pulled down the score.

2. Pay Back or Raise A Dispute:

If one has actually missed a payment, one should immediately pay the outstanding amount with all interest and fees due to the lender. Once this is done, a formal request has to be made to the lender to update the records so that the credit report and score in the future is reflective of the new position. This does take a few months to get captured in the credit report and thereby in the credit score.

3. File An Online Dispute With The Credit Bureau:

This can be done in the dispute resolution section of the website where the associated form has to be filled. It would also require entering the nine-digit number from the credit report that captures the information under dispute. A person would have to access myCIBIL and pick credit reports section and within that check the subsection under ‘Raise a Dispute’. The form can be completed and submitted online.

4. Verification:

After the dispute form has been submitted online or offline, the credit information agency seeks to verify the dispute. In the process, it will have to check with the bank or lender as the credit bureau itself cannot randomly decide on the case.

5. Keeping Track:

One should remember that even after submitting the dispute the problem is not sorted instantly as it needs to go through the process. Usually, a wrong entry gets corrected in a CIBIL credit report in about 30 days, though this could get stretched. But it is not supposed to be an endless wait as lenders associated with the default note need to resolve the matter within 45 days. The good news is that if the lender’s response is not satisfactory, the applicant can raise another request with CIBIL for a resolution.

Conclusion

The CIBIL score is an important primary filter used by lenders in their loan approval decisions. A higher score means higher creditworthiness and a lower score tends to signal a risky borrower. But at times, the credit report carries an error and it needs to be sorted for the future as unresolved credit history notes can disqualify one from availing a loan in the future. One should check credit reports for any such errors as also pick any actual missed payments, via periodic checks. There is a formal process to lodge a dispute to repair one’s report.

IIFL Finance offers a full stack of loan products for individuals and businesses, either a secured loan product or one without collaterals, based on a person’s past credit behaviour as well as other parameters such as income, cash flows and repayment capacity. The leading NBFC has adopted a fully digital loan application process to make it easier for borrowers and offers the most competitive interest rates in the market to those with high credit scores.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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