Imagine a scenario in which you are applying for a personal loan at a digital lending platform, such as Loan Singh. With instant loan approval, you are expecting to get the loan amount within 36 hours. You feel confident about getting the financial assistance, as three months ago you had paid-off an earlier personal loan. You have never defaulted in any loan EMIs and your income is healthy. But Alas! your loan application gets REJECTED!
Reason provided: “Your credit bureau score is poor”
Dejected? Off course you would be!
How can your credit bureau score be deemed poor when you have been prompt with all the loan EMI payments, and have recently paid-off a loan? While doing a personal check of your credit bureau report, you find that the bank has not notified the credit bureau with regards to your loan clearance. The report still shows you have a final EMI pending, giving an indication that you are a defaulter – thanks to a month already gone by.
A scenario like this can leave you devastated, but it’s quite common. Read on to know what is a credit bureau report, what types of errors exist, things that can go wrong with your report and the remedies.
Credit Bureau Report
A credit bureau report is a key aspect in getting your unsecured personal loan approved. It is report of all your credit/debt transaction details such as loan EMI payments, type of loan, amount of loan availed, etc. It also shows your credit card related information such as the number of credit cards you own, number of times you defaulted in your bill payments, the available credit limit, outstanding balance due, etc. The report does not indicate information related to your savings and investments; but it does contain personal information such as your full name, date of birth, contact address, contact number, your PAN, your voters ID number, etc.
Compiled from the credit bureau report, is a credit bureau score – a 3-digit number ranging between 300 and 900. The credit bureau score tells a digital lending platform about how much credit worthy you are. The higher the score, the better your chances of getting the loan approved. As the credit bureau report plays an important role in a digital lending platform’s decision to approve you for credit, it is a must for you to check for any errors in it.
5 Things That Can Go Wrong in Your Report
There are a number of fields that can turn erroneous in a credit bureau report. 5 such fields are:
Personal Information Errors
Lakhs of names are stored in the credit bureau database. There is a possibility that your report gets mixed-up (also known as ‘mixed file’) with someone else’s, having a name similar to yours. In fields containing your personal information, your name can get misspelt. Human errors, during input, can occur in fields such as date of birth, gender, passport number, income tax ID number, voters ID number etc.
Credit Information Errors
This is the most serious of all credit bureau errors, and will directly affect your credit bureau score.
- Your credit type (secured or unsecured) can be indicated wrongly.
- Wrong mention of your Loan amount tenure, loan approval date, loan amount, loan status, etc.
- More than one mention of same debt (possibly with different names)
- Closed accounts mentioned as “Open”
- Incorrect mention of credit limit or outstanding balance
- Financial theft, wherein somebody has used your credit card at an ATM or made purchases
- Incorrect mention of Accounts, tagging you as delinquent or late payer.
Contact Information Errors
Errors in your contact information field can include new address not updated despite intimation to the credit institution, incorrect state declared, error in pin code, and the likes.
Employment Information Errors
Your employer’s details can be reported wrongly, not updated current employer details, salary being wrongly reflected, wrong mention of work experience, and the likes.
Each time you apply for fresh credit, a hard inquiry is generated when the credit institution requests for your report from the credit bureau. Errors here include incorrect entries for hard inquiries.
What Can You Do If Things Go Wrong?
A good practice is to apply for a credit bureau report, directly from a credit bureau, to spot any errors. This not only helps in preempting any loan issues, but to also gauge spending patterns and rectify your repayment behavior. A nominal charge of approx. Rs.450 is charged for applying for a credit bureau report at a bureau’s website, like CIBIL.
- Once you spot any errors in your credit bureau report, initiate a dispute at the credit bureau’s website.
- You can dispute multiple fields of your credit bureau report, in a single request.
- Notify the bureau by writing to them (also attach the copy of your erroneous credit bureau report) and then fill-up the online dispute form.
- Keep a print out of the completed online dispute form, as proof.
- Also post dispute, you will be given a “Dispute ID” for future references. The bureau will then initiate investigation on your dispute claim. Take note of your Dispute ID.
- It may take time to get a response (with the bureau waiting on the credit institution). The entire process can take up to 30 days. Be patient.
- In case of a mistaken identity, the bureau will contact the credit institution to clarify about the profile which has been wrongly mentioned. In such cases, the turnaround time could increase to about 45 days. Provide the bureau any extra details, if they request.
- Once the investigation is complete, the bureau will update the report and inform you. If not satisfied with the accuracy of the report, you can raise another dispute with the bureau.