Does a change in the spelling of your name or surname impact CIBIL Score

Consider the following three situations:

  • Vikas has a three credit cards and he is late in paying the bill by a few days on almost all three of them since the last few months.
  • Priya is getting married next month and is planning to change her name and adopt her husband’s surname post marriage.
  • Ayesha has a home loan which she plans to prepay in the coming few months using the performance bonus she is expecting.

Which of the above three situations is likely to impact your credit score and in what way?

  • Delayed payments by Vikas are harmful for his credit score, the more frequently he does it the worse it is. He will have to remedy his ways and will have to figure out bad credit fix soon to rectify this situation.
  • Priya changing her name or surname or both post marriage or otherwise will have no impact on her credit score whatsoever.
  • Ayesha pre-paying her loan will give a temporary jolt to her credit score but it not something that will have a lasting negative impact on the credit rating.

Name Change and Its Impact on the Credit Score:

As we said above changing the name or the spelling, adopting a new name, adding a surname etc have no impact whatsoever on the CIBIL score. The credit rating calculation is based on five parameters which are as follow: repayment history, credit mix, utilization ratio, credit inquiries and age of credit. Personal details like name, age, sex or contact details etc are not taken into account when calculating this score. Another aspect that needs to be kept in mind is that the income levels of an individual also have no impact on the calculation of the score; however lenders may want to have a look at the debt to income ratio or length of service etc before deciding whether they will lend to an individual or not.

When one changes their name all the details about various loans, credit cards and their repayment etc are carried forward in the new name. Past history whether good or bad is not erased so the score remains whatever it is without any impact on it due to name change.

Since CIBIL gets all data from lenders you need to inform the lenders as well as the rating agency about the name change so that the necessary changes can be made in the records. You will have to update the records with all the lenders from where you have running loans and also with credit card companies. They will make the necessary changes and the records are carried forward in the changed name.

You need not close or surrender your cards due to a name change; you can just inform the credit card company and get a new card issued with the changed name spelling without the need to close or surrender a card. This will ensure that older accounts remain in your credit trail which is good for the overall credit rating.  Women when getting married and changing their name/surname or adding their spouses name need to be especially careful. They should make sure that they get the necessary changes made so that their credit history is carried forward. Failing to do so, they may find it difficult to get a loan or credit card sanctioned in future in absence of any credit trail. It is also important to keep old accounts active and running to have a deep credit trail which gives a better picture of one’s credit behavior.

Though change in name does not directly impact the credit score it may cause delay or hassles if one is looking at applying for a card or a loan in the ensuing period. Change in the records of CIBIL does not happen immediately so they find themselves in a tricky situation when applying for new credit. This can be avoided to an extent by writing to CIBIL directly rather than waiting for the lenders to do so. Also ensure that you have sufficient time lag between the name change process and apllying for any fresh credit.

 

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.