Time and again we come across experiences, both online and offline, where individuals are stumped to receive a rejection response from their lender. It is particularly disheartening when the loan amount was meant to pay college tuition fees or for a medical emergency.
What if we tell you that this rejection happened due to the presence of errors on your credit report? Yes, you did read that right: any error, however small on your credit information report, could be the one that is separating you from your loan amount.
Let’s straighten out a few things before we tell you about the errors in your credit report. A low credit score could be due to many other reasons such as past delinquent behaviour, an uneven credit mix like having more unsecured loans (e.g. personal loans) than the secured ones, etc. However, if you have not been a serial defaulter and displayed good credit behaviour over a considerable period of time and still get rejected on a loan application, then the reason would most likely be an error on your credit report.
This might seem fundamental, but the first thing to do would be to obtain your credit report; and with regulations it has become very easy to obtain. An RBI ruling states that any individual can approach one of the four credit bureaus in India, namely CIBIL, Equifax, Experian and CRIF High Mark for a credit information report and get it for free once a year.
What are the errors that I should be looking for?
To know where the errors are on the report, we should first look at what your credit report contains.
A credit information report issued by any of the four credit bureaus consists details like personal information, account information and dispute information as detailed below:
# Personal Information
# Date of Birth
# Contact Information
# PAN number
# Account Information
We shall now see the key information which is likely to be found on your credit report, which includes the details of your loans and credit cards, amount payable, date of last payment and a monthly tracker on how you have performed over the year. The credit report also consists of the previous disputes that you have raised with lenders.
Errors could be found in any of the sections and these could be in the form of inaccuracies, duplicate information and wrongly mapped accounts. The ones to look out for specifically are, the loan or credit card accounts of others which are mapped to your credit report and if these turn out to be problematic accounts, they would surely lead to a low credit score.
How Do I Correct the Information on my Credit Report?
The process to remove or correct the information on your credit report is called a dispute resolution process and it usually begins with a dispute resolution form. Due to the number of stakeholders involved (the credit bureau, the lender and you the borrower) the dispute resolution process could take a minimum of four weeks.
The steps involved in the process are:
Step 1: Completion and submission of the dispute resolution form to the credit bureau
Step 2: The credit bureau takes up the dispute with the concerned lender
Step 3: The lender accepts or rejects the dispute
Step 4: Accepted changes are reflected in your credit report.
As the saying goes, the devil is truly in the details. Information on your credit report might look innocuous but even a small error could stand in the way of your immediate needs. Pro-actively checking your credit profile regularly can help in this endeavour. Take the first step now and obtain a copy of your credit report.
(By Ranjit Punja, CEO & Co-Founder, Creditmantri)