8 Common Types of Credit Report Errors and How to Fix Them

Different Types of Credit Report Errors and How to Fix Them_Banner_WC

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Different Types of Credit Report Errors and How to Fix Them_WC

4 min 11 Jul 2023

Highlights:

Common Types of Credit Report Errors
How to Dispute Credit Report Errors?

Before applying for a Home Loan, it is advisable to check your credit report to ensure you meet the required CIBIL score of 750. A high score reflects responsible credit behaviour and may increase your chances of loan approval.

Credit information bureaus assign credit scores to borrowers based on the information received from financial institutions and lenders. Sometimes inaccuracies such as unreported repayments, duplicate accounts, or incorrect outstanding balances may arise in your credit report. This can negatively impact your score. Addressing discrepancies promptly can prevent unnecessary loan rejections and ensure smoother loan approvals.

What is a Credit Report and How Can You Check It?

A credit report is a detailed record of your credit history, encompassing information about your credit accounts, payment patterns, outstanding debts, and other financial activities. Lenders utilise this report to assess your creditworthiness when you apply for loans or credit cards.

In India, you can access your credit report from any of the four credit bureaus: TransUnion CIBIL, Equifax, Experian, and CRIF High Mark. To check your credit report through TransUnion, follow these steps:

Go to the TransUnion CIBIL website.
Navigate to the 'Get Your CIBIL Score' or 'Credit Report' section.
Fill out the required personal details, such as your name, date of birth, address, and identification numbers (e.g., PAN).
Complete the verification process, which may involve answering security questions based on your credit history.
Choose from available plans, which may include one-time access or periodic updates.
Proceed to payment, if applicable, using the provided payment methods.
Once the process is complete, you can view and download your credit report.

Common Types of Credit Report Errors

1. Incorrect Personal Information 

Your credit report is a digital record of your current and past loan accounts, including those you have repaid. It also includes personal details such as your name and address that help lenders verify your identity. If this information is incorrect, it may cause identification issues by potentially mixing up your credit profile with another borrower. To prevent this, check your credit report regularly and ensure all details are accurate.

2. Incorrect Account Information

The credit report also includes details of all your current accounts. Account-related inaccuracies, such as an open account being reported as closed or a closed account as open, may occur in the credit report. Similarly, a borrower might be mistakenly identified as the owner of an account. These discrepancies can impact a borrower’s credit score, making it essential to review the credit report regularly and ensure all account details are accurate.

3. Incorrect Credit Limits 

Your credit score is influenced not only by your loan accounts but also by how you manage your credit cards. At times, credit reports may display incorrect credit limits for various accounts. This can affect your credit score, as the credit limit directly impacts your credit utilisation ratio—a key factor that makes up nearly 30% of your overall score. Therefore, when reviewing your CIBIL score, it is essential to verify that the credit limits for all loans and credit accounts are accurately reported.

4. Duplicate Accounts 

Duplicate accounts refer to cases when the same account, loan or debt is listed more than once. It can impact a borrower's credit score as it affects their debt-to-income ratio.

5. Incorrect Credit Report

A common credit report error is loan accounts that have already been closed by the borrower appearing as open in the credit report. This is one of those errors that has a major impact on a borrower's credit score. 

7. Incorrect Loan Delinquency

An error that can significantly impact a borrower's credit report, especially when applying for a home loan, is when accounts are incorrectly reported as delinquent, despite timely repayments. Loan delinquency is a key factor in credit assessments. If a credit report mistakenly reflects a fully repaid loan as delinquent, it is important to address the issue promptly. Such inaccuracies can lower a credit score and affect future loan approvals. Regularly reviewing the credit report helps ensure that all repayment records are accurately reflected.

Credit report errors can lower your chances of loan approval. Therefore, you should check your CIBIL score at least once every six months and make sure your credit report is error-free

How to Dispute Errors on Your Credit Report?

On checking your credit report, if you find that there is an error in your report, you can dispute it with the respective credit bureau. To raise a dispute with TransUnion CIBIL, follow these steps:  

Start by obtaining a copy of your credit report from CIBIL. Carefully review all details, including personal information, account statuses, credit limits, repayment history, and any reported delinquencies. If you do see an error in your report, collect all the documentation that you will need to submit while reporting the discrepancy in your credit report.
Look for any inaccuracies, such as incorrect personal details, ownership issues, duplicate accounts, inaccurate credit limits, or wrongly reported delinquencies. Make a note of each discrepancy along with supporting documents, such as bank statements or loan repayment records, to validate your request.
Visit the official website of CIBIL and log in to your account.
Navigate to the dispute resolution section.
Select the type of error (e.g., incorrect balance, ownership issue, or duplicate account).
Provide necessary details and upload supporting documents if required.
Submit the dispute request.

CIBIL will review your dispute and coordinate with the concerned lender. This process usually takes up to 30 days. You can track the status of your dispute through the CIBIL website.

Conclusion

Maintaining a good credit score is essential for securing favourable loan terms. It is advisable to check your CIBIL score and credit report regularly to identify and rectify any errors that may impact your loan eligibility. A score of 750 or higher can increase your chances of loan approval and ensure a better interest rate.

Different Types of Credit Report Errors and How to Fix Them_FAQ_WC

FAQs

Borrowers can check their credit report as often as they want. Ideally, they should check their credit report at least once every six months. If you use TransUnion CIBIL, please know that you must pay a subscription fee to be able to access your credit report. Based on the subscription plan you have chosen and the fee you have paid, TransUnion CIBIL will send you your credit report once, on a six-monthly or monthly basis. If you are planning to apply for a loan soon, you must check your credit report every three months and make sure there are no errors in it and your credit score is also at least 750, if not more. 

Every time a borrower applies for a loan, the first thing that a lender does is check the borrower's CIBIL score to assess their repayment capacity and creditworthiness. Every time a lender checks a borrower's CIBIL score, the enquiry made by them gets registered as a hard enquiry. Too many hard enquiries portray a borrower to be credit hungry or excessively dependent on credit and are therefore seen as something negative. Too many hard enquiries bring down a borrower's credit score. 

On the other hand, when a borrower checks their credit score, it is known as a soft enquiry. Soft enquiries do not have any impact on a borrower's credit score. Borrowers can check CIBIL score as many times as they want and their credit score won't get affected. However, they must refrain from applying for too many loans and credit cards, especially if they plan to apply for a loan any time soon.

Yes, borrowers can dispute credit report errors online. If your credit report has an error, there are two ways in which you can get them rectified. The first method requires you to write a letter to the concerned credit information bureau. The second method involves filling out an online dispute form. 

Credit report errors won't stay on your credit report for far too long if you report them as soon as you see them. Please note that after you raise a credit report error dispute, the concerned credit information bureau will write to the concerned lender or financial institution seeking clarification. The lender/financial institution will have 30 days to reply to the query made by the credit information bureau. Once the credit bureau receives a reply from the lender, they will forward it to you. If you are happy with the answer, the credit information bureau will update your report. In general, rectifying errors takes up to 48 days and it takes another few days for the changes made by the credit information agency to reflect in your credit report. So, after you have spotted an error in your credit report and reported it immediately, expect it to stay there for about 2 months. This is the reason why borrowers are asked to check their credit report at least once every six months and make sure there are no errors in it. If a borrower plans to apply for a loan anytime soon, they must check their credit report more often, say once every three months and scan it for credit report errors every single time.

Credit report errors, such as missed payments, incorrect credit limits, or inaccurate personal details, can reduce your creditworthiness and affect the applicable interest rate or other borrowing terms.

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