What you must do if there are errors on your credit report

Financial advisors always suggest that one must review the credit report periodically. The information in the credit report has a direct impact on your credit score. It determines whether you can get loans in future and how much interest you need to pay. Hence it is imperative to make sure that the data in the report is accurate, complete and up to date. A periodic check also helps guard against identity theft. You can quickly find out if someone uses your personal information to commit fraud.

How can errors crop up and what kind of errors should I look for?

Banks and financial institutions hold all the data pertaining to your credit card and loan accounts. They keep track of your payments and pass on the data to the credit bureau. If the information passed on is inaccurate then there might be errors in the credit report. Mistakes in data entry or time lag between data collection, submission and updation of details can lead to discrepancies. These can relate to your personal details for example misspelt name, wrong date of birth, PAN number etc. There may also be mistakes in the balance amount, account status or payment details. More serious errors include inclusion of credit card or loan accounts that you have not taken.

What to do if there is inaccurate information in the credit report?

However trivial or serious an error maybe, you should get it corrected to prevent any negative impact on the credit score. CIBIL has a dispute redressal mechanism through which you can report the discrepancy and get the mistakes corrected.

Fill a dispute resolution form

The first thing that you need to do is to file a dispute by submitting an online dispute form available at the CIBIL’s website. You need to furnish your personal details, the nature of the error and a brief description of the error in the online form. You are also required to fill in a control number. This is a unique 9 digit number that you can find on your CIBIL report. This number aids CIBIL in identifying the report for which CIBIL dispute is raised. Once a dispute is raised you will receive an email mentioning the dispute ID that can be used for future correspondences.

Verification of information

CIBIL contacts the concerned financial institution to verify whether the dispute is legitimate or not. Only after the credit institution gets back to CIBIL with the relevant facts and authenticates the dispute, will CIBIL go ahead and rectify the errors. CIBIL is not authorized to make any changes to the Credit report without proper verification. Only when the loan provider confirms the error CIBIL will update the records with the correct data. You will keep getting email notifications regarding the status of your request. When the dispute gets resolved you will be notified accordingly. CIBIL usually takes 30-40 days to resolve any dispute depending on the time the credit institution takes to revert back with the required information.

If the mistakes in the credit report relate to personal details or incorrect overdue amount then the resolution happens faster.  But in case you find entries of loans or credit card accounts that don’t belong to you, then it is a case of mistaken identity and it may take a little longer to resolve the issue. The law requires the bureau to come up with a formal resolution of dispute within 45 days of the dispute being raised. Once you get the resolution you can apply for the report again to see whether the changes got reflected.

In case you are not satisfied with the resolution provided you can approach the bureau again and initiate a fresh complaint. The information will be re-verified with the bank. Usually CIBIL provides a satisfactory resolution but it takes time to verify and correct the errors. So you need to be patient during the entire process.

 

CIBIL report is increasingly gaining importance. It is prudent to reflect upon it if you wish to have a smooth loan application process. You should check the report at least once every year. If you haven’t done it till now, make sure you do it at least 3-4 months before you wish to apply for any loan. In case you uncover any errors you will have sufficient time to get them rectified.

Be mindful that the errors can lead to depleting your credit score and you may be left with little options but to look for bad credit fix and apply for personal loan with low CIBIL score.

Are CIBIL Score and CIBIL Report Two Different Things?

Whenever you apply for a credit card or a loan at banks or NBFCs they perform a credit check and determine your creditworthiness. It is calculated on the basis of two factors: CIBIL score and CIBIL report. Although they both complement each other and serve the same purpose (helping lenders determine credit lending risks), they are different from each other in many ways. To understand these differences, you must first know what these two credit evaluation factors are exactly.

Credit Score

There are many credit bureaus of India that maintain and provide credit scores of different individuals to the banks and other financial institutions. Some of the popular credit bureaus include CIBIL, Equifax India, Experian India, etc. These bureaus analyse your credit history, payment patterns, credit utilization habits, etc. for your credit score calculation. Generally speaking, the higher is your score the greater is your creditworthiness. In other words, if you have a high credit score then you are considered as a responsible credit user, and lenders will find it easy to trust you with lending a loan or approving a credit card. On the other hand, if your score is less than average then your credit utilization behaviour is not considered satisfactory, and thus lenders will shy from lending you credit. Even if you are able to get a loan with a poor credit score you will likely have to pay a high interest than normal.

Credit Report

As the name suggests, your credit report contains the summary of your credit-related activities. Thus, it covers your loan payments, credit card bill payments, existing debt, etc. It also contains your personal information- name, address, contact information, bank account information etc.

The CIBIL report is divided into the following sections:

Personal information

In this section the report presents your personal details, such as name, address, phone no., voter ID number, PAN number, passport number, etc.

Employment Information

As the name suggest the “Employment Information” section contains your employment details. It includes your current occupation and income. You may find the information here outdated, as this section is updated when you get a loan for the first time. So, if it has been many years since then and you have switched jobs then CIBIL may not have updated the same on the report. You have to inform them of the same to make the changes.

Account Information

It is one of the most important sections of your credit report, as it contains your financial details which matter the most to the lenders. Section fields include your credit limit, pending debt, no. of collaterals and their values, etc.

Enquiry Information

This is another important section of the credit report. It contains the list of all the enquiries that have been made by the banks and NBFCs in the past 1-2 years. If a lot of enquires have been made in a short period of time it shows two things- that you are credit hungry, and that many lenders have already rejected your applications. Thus, it raises a red flag and affects your score negatively.

More on the Differences

It must be clear to you by now how a credit score is different from credit report. However, there is another major difference that must be pointed out. While the format of the credit reports followed by most credit bureau is similar, there scoring system can vary greatly. Thus, it is unlikely that you will get the same score from different bureaus. There are two reasons behind it-

  • Different credit bureaus use a different formula for scoring. Thus, one bureau might deduct 10 points on every delayed payment in the past 6 months, while other might deduct 20.
  • The floors and ceilings on the scoring spectrum vary from one credit bureau to another. For instance, CIBIL provides a score ranging between 300 to 900 and Experian from 1 to 1000.

Conclusion

No matter which credit bureau your lender has partnered with, developing good credit utilization habits is extremely important. Make sure you check your credit report from time to time, especially because it’s easy to get a free credit report India.  Pay your payments on time, and don’t use credit cards excessively. Even little things like these can make a big difference to your credit score.

 

Should you take a personal loan when facing cash crunch?

The popularity of personal loans has soared high in recent times. In the age of instant approvals and quick disbursements personal loans have become a fast track solution for financial problems. Medical emergency in the family, child’s higher education, paying off high interest debts, funding a vacation, home improvements—these are just a few situations where small personal loans come in handy and provide quick and easy access to funds.

However, you need to be cautious while taking this loan. The temptation of quick and easy availability is so high that people often get caught in debt traps and face a crisis situation later. In order to stay financially safe be doubly sure whether you really need the loan and handle it properly once you take it.

Lenders who give unsecured personal loans offset their risk by pricing them much higher than the loans that are backed by collaterals. An extremely high rate of interest makes this form of credit quite expensive. Keep in mind the following rules before going for an easy personal loan.

 Consider your finances and borrow only the amount that you can repay

Small personal loans have short repayment tenure so large monthly EMIs can strain your budget. Your monthly outgo towards all your loans should not exceed 50% of your monthly income.  If a large part of your income goes into EMIs then your other critical financial goals like child’s education or saving for retirement will get affected. Banks always want you to borrow large amounts, but you should borrow only the amount that you can easily repay.

Do not borrow to splurge

You may have all the reasons to take a break and go on a long holiday, your wife may ask for a diamond ring on the silver jubilee anniversary , your teenage daughter may want a designer wardrobe, luxury watches and high end bags; but remember you should wait till you save enough for these expenses. If you borrow to pay for these expenses you will keep paying the EMIs long after the thrill and excitement to splurge has faded away. Remember to live within your means and borrow only if you really need the funds. After all, unsecured  personal loan only provides instant access to funds. It is not free money. It has to be repaid along with interest.

Do not borrow to invest

The golden rule for investing is to never borrow money to invest. The interest that you get on safe investments like fixed deposits will not match with the interest you pay on loan. Equity investments that do offer high returns are risky and volatile. If stock market declines you will not only suffer losses but will be tied up with an EMI obligation as well.

Consider other cheaper alternatives

Since unsecured personal loans are expensive it is always better to explore other cheaper alternatives first in case of cash crunch. Taking loan against assets like gold or fixed deposit may turn out to be a much cheaper option.

 

There are some situations where taking a personal loan is a wise decision

 

Repay a high interest loan

 

If you have a high outstanding credit card balance with an exorbitant interest rate of 28% it is prudent to take a small personal loan at 18% to repay it and reduce your interest outgo substantially.

 

Consolidating debts

 

In case handling several loans and credit card repayments is becoming unmanageable, small personal loan can be used to consolidate all your payments. Though it is only a transfer of debt pile and does not reduce your overall debt, still concentrating on a single loan payment is much easier.

 

Medical emergency

 

If you need money instantly in case of an emergency hospitalization you can rely on personal loans. Fast approvals and quick disbursement of the loan amount will help in arranging for funds in a much shorter time. An online comparison of personal loan interest rates can help in identifying the cheapest option available.

 

Defaulting on the loan can have serious consequences. Late payments or missed EMIs impact your credit report and mess up your CIBIL score. It may also hinder your chances of getting loans in future. So be a disciplined borrower and make sure you make your repayments on time.

 

Personal loans are easily available today. It is a good option if you are looking at consolidating your debt or paying off a high interest loan. But for spending on luxury items it is always better to save first, than pay a high interest on it. Being thoughtful about your own decisions and actions will save you from entering a debt trap.

Beware – Your Job Application May Get Rejected For Poor CIBIL Score!

Have you been facing rejection by the recruitment companies again and again despite having a good academic record and experience? Maybe you should check your CIBIL score. Yes, you read it right! The significance of CIBIL score has penetrated the hiring industry as well recently. What used to be a benchmark for financial institutions to gauge an individual’s creditworthiness, has now become a standard for assessing reliance. Many companies belonging to the banking, financial services and insurance (BFSI) sectors have started checking the credit score of the applications during the selection procedure.

Taking CIBIL rating as a benchmark for integrity and dependability may come as a surprise for Indian citizens, but many western countries have been following the same for quite some time now. In fact, many western companies give a lot of importance to candidate’s credit score and credit report when considering their application.

Here are a few major reasons why a CIBIL score check helps the recruiters to understand the abilities of a candidate better:

  1. Responsibility

A responsible credit user who always pays their payments on time, and never allows a high debt accumulation, is highly likely to be a responsible person in general too. In fact, without being responsible and careful you can’t have a decent credit score. So, when the recruiters get CIBIL rating online for a certain job application they can get an idea of how much responsible and trustworthy the person is.

  1. The Stress Factor

Most people who have a poor credit score are also likely to be more stressed out than those who have maintained a good score. The reason is simple- if a person is having a bad score, they are likely to be falling behind with their payments. There is also a possibility for defaulting, which puts them in a risky position. The hiring company is natural to think the candidate might not perform well at their job when they have such a high level of stress due to debt accumulation. Also, there is no telling when the person enters a financial crisis that takes away their focus from the work altogether.

What to do If you Have a Poor Credit Score?

It is incredible how easy it is to get a free credit report India. You just need to fill out an online form, provide some basic details, and then pass the CIBIL consumer login phase to receive a copy of your report in your email inbox.

If you find out that your score is poor, then it is important that you improve it as soon as possible. Since it is a time consuming process, it is best to get started immediately.

For starters, you can start becoming regular with your EMIs and credit card payments, and lowering your credit usage. You can also get your report corrected for mistakes, which will improve your score as well.

Many times innocent people who have been responsible with their credit usage also get a bad score. A major reasons for this is identity theft. The culprit uses their credit irrationally and blatantly, which causes a major drop in their score. If this is the case with you then you can inform the hiring company of the same. They are likely to understand your situation and take the next step accordingly. In most cases the companies verify your statement by going through the report themselves, and get more information from CIBIL, if required. If everything looks alright they will ignore your credit score and proceed further.

What to do if You Want to Improve Score Fast?

If you don’t have a good reason why your score is bad then improving it is your best option. But what you could do when you don’t have much time at hand, and the job you are interested is only available for a limited time?

If you want to facilitate the process of score improvement, then it is best to hire a professional. A credit consultancy company such as Credit Sudhaar can provide some of the best credit experts who will go through your report and then devise the best strategy that can improve your score in the soonest possible time. In fact, depending on your situation you can see significant improvements in just a few weeks.