Steps to Rectify CIBIL Report Errors

The CIBIL score is a three-digit number between 300 and 900 that reflects a borrower’s attitude towards credit and their ability to repay a loan on time. The purpose of the CIBIL score is to help lenders assess the risk involved in lending money to a borrower. The CIBIL score is calculated based on the credit information report, also known as the CIBIL report, which is an electronic representation of a borrower’s credit repayment history. A borrower’s CIBIL report contains information regarding their credit history, that is the ongoing loans that one has and the loans they have already repaid, credit cards they are using, credit card dues, etc. The credit information report also contains information regarding a borrower’s employment status and history. 

Sometimes, your CIBIL report may contain errors that must be corrected. Failure to do so will lower your CIBIL score and, as a result, your chances of obtaining a loan or credit card in the future. This article will explain the types of CIBIL errors that can be found in your report and provide a step-by-step breakdown of the CIBIL report correction process. 

What is the Importance of the CIBIL Score? 

The CIBIL score depicts a borrower’s ability to repay a loan on time. It ranges between 300 and 900 and the importance of CIBIL score in the loan approval process is such that any borrower who does not meet a lender’s loan eligibility criteria regarding credit score may get instantly rejected. Borrowers who have a good CIBIL score, that is, anything between 750 and 900, are borrowers who have a responsible attitude towards credit and are unlikely to default on loan repayment. 

Thus, the ideal CIBIL score for Home Loans is 750 and borrowers who have such a CIBIL score may get approved for a loan instantly. Further, such borrowers can benefit from lucrative loan terms and conditions, such as low interest rates and long repayment tenure. On the other hand, borrowers whose CIBIL score is below 650 may find it difficult to get approved for a loan.  

A CIBIL score between 700 and 750 is considered fair and though such borrowers get approved for a loan, the terms and conditions of the loan are not always beneficial. This is because borrowers who have such a CIBIL score have missed EMI payments in the past and therefore, lenders know there is some amount of risk involved in lending funds to such borrowers.   

If you are planning to fund a real estate purchase with a loan, make sure you have the ideal CIBIL score required for a Home Loan. This will help you avail of a higher loan sanction at low interest rates and therefore, reduce the cost of borrowing.  

Also Read: Tips to Maintain Your Business CIBIL Score Above 700 

What are the Types of CIBIL Errors? 

If you do not have the CIBIL score required for a Home Loan even though you have been a reliable and responsible credit user, check your CIBIL score report for errors. Here are some of the common types of credit report errors: 

• Incorrect Personal Information 

Sometimes, incorrect information may get passed on about a borrower, such as incorrect name, mobile number, email ID, and PAN number. Though this does decrease a borrower’s CIBIL score, it makes it difficult for a lender to identify the right borrower. 

• Wrong Loan Accounts on Your Name 

With lenders handling vast customer bases, occasional confusion may arise. Consequently, there's a possibility of lenders associating a borrower with the wrong loan account. Such instances can impact a borrower's CIBIL score and their eligibility for future loans. 

• Incorrect Account Status and Payment History 

Sometimes, even after a borrower has entirely paid off the loan, their CIBIL report shows the loan status to be active. Similarly, sometimes, even after a borrower has paid their loan EMI on time, their credit information report shows the loan EMI status to be unpaid. Such errors negatively impact a borrower’s credit rating and must be disputed immediately. 

• Incorrect Credit Limit 

Sometimes, a borrower’s credit report shows an incorrect credit limit. This affects a borrower’s CIBIL score as it affects their credit utilisation ratio. The credit utilisation ratio is the ratio of balance used to balance available expressed in percentage. Borrowers who want to have the ideal CIBIL score required for a Home Loan should maintain a low credit utilisation ratio. This is the reason why borrowers should monitor their credit reports from time to time and make sure the credit limit specified under each card is correct.  

• Duplicate Accounts 

Sometimes, a borrower’s credit report shows the same account added twice. This affects a borrower’s CIBIL score if the duplicate entries are delinquent or late accounts. Borrowers should get the duplicate accounts removed from their credit report if they are affecting one’s CIBIL score for Home Loans. 

• Errors Related to Days Past Due 

Days Past Due is a term that is used to denote the number of days that have passed since you missed your EMI payment. For lenders, a clean repayment history is very important. Too many late payments and missed EMIs make lenders dubious about a borrower’s repayment capacity. Borrowers who have an XXX or 000 under their name in their credit report are people who have missed EMI payments in the past. However, sometimes, borrowers find a numerical value other than XXX or 000 under their name even when they have paid all their dues on time. Such a mistake can have terrible consequences for a borrower’s credit score and must be reported immediately.  

• Errors Related to Balance Amount 

Many times, the errors in a CIBIL report are related to the balance amount. Some borrowers find that their account has been listed down with the wrong balance or wrong credit limit. It is also not uncommon for borrowers to find the same debt listed more than once on their credit report. All such errors damage a borrower’s CIBIL score and CIBIL report.  

• Errors Related to Closed Accounts 

Once you have repaid a loan completely, the account is considered closed. Sometimes, borrowers see closed accounts as open in their CIBIL report. Similarly, sometimes, errors under this category are related to the day on which the account was opened, the day on which the last payment was made, the date of the first delinquency, etc.  Such errors have a direct negative impact on a borrower’s CIBIL report, CIBIL score and home loan applications. Therefore, these errors must also be reported and fixed immediately.  

• Errors Related to Overdue Amount 

If under one of your loan accounts, you see an overdue amount even when you have honoured your repayment obligation, you must report it to the credit rating agency. Such errors bring down one’s CIBIL score and must be corrected before they do too much damage.  

Also Read: Tips to Help You Improve Your CIBIL Score  

Steps to Rectify CIBIL Report Errors  

If you see an error in your CIBIL report, report it immediately, especially an error that is affecting your CIBIL score for Home Loan. Follow these steps to rectify CIBIL errors:  

• If you want to rectify CIBIL errors, you will have to raise a dispute with CIBIL. To raise a dispute with CIBIL, go to the credit information bureau’s official website and log in to your account with your account details. Once you are logged in, go to the dispute resolution section and fill out the online form. 
• Credit information bureaus cannot make changes in your CIBIL report on their own. Thus, after you have submitted the form specifying the type of credit error, the credit information bureau will approach the lender regarding the errors that you have raised. Lenders are required to reply to CIBIL queries within 45 days.  
• As soon as the bank reverts to your query, CIBIL will make changes to your CIBIL score report. However, it will take a few weeks for these changes to reflect in your CIBIL score. 

Steps to Improve Your CIBIL Report

If you are applying for a Home Loan, know that the ideal CIBIL score required for a loan is 750. Such a CIBIL score will not only ensure quick approval but also a lucrative loan deal. So, how to check your CIBIL score and what to do if your CIBIL score is not within the good CIBIL score range? Well, one can check their CIBIL score online by either going to CIBIL’s official website or using one of the websites that offers this facility for free. Further, if your CIBIL score is not 750, do not worry. Here are a few tips that will help you improve your CIBIL score.

Improve Your Credit History 

Your credit history makes up 35% to 40% of your credit score. It is the factor that affects a borrower's credit score. Therefore, if your CIBIL score is below 750, start paying your credit card bills and EMIs on time. Set up reminders and auto-payments to protect your CIBIL score as well as protect yourself from late fees and other penalties. 

Maintain Low Credit Exposure 

Credit exposure refers to the ratio of credit used to the total credit available. Borrowers with high credit exposure have a low CIBIL score as lenders and credit information bureaus see these borrowers as being highly dependent on credit. Borrowers who want to push their CIBIL score into the good range must maintain a credit utilisation ratio of below 30%. This can be easily done by using one's credit cards wisely, not exhausting the credit limit on one's cards and paying the entire amount due each month and not just the minimum amount due. 

Maintain a Healthy Credit Mix 

Borrowers who have a healthy mix of secured and unsecured loans have a higher CIBIL score as a healthy credit mix convinces lenders of a borrower's ability to handle different types of credit. If your credit score is below 750 and you are already paying off a secured loan, such as a Home Loan or a Loan Against Property, avail of an unsecured loan, such as a personal loan or a car loan, to  boost your credit mix and your CIBIL score. 

Avoid Unnecessary Hard Inquiries

When a borrower applies for a loan, the first thing that a lender does is check the borrower's credit report. Lenders do this to assess a borrower's creditworthiness and repayment capacity. However, every enquiry that a lender makes about a borrower gets registered as a hard enquiry on the borrower's credit report. Too many hard enquiries show a borrower to be credit-hungry and reduce the borrower's CIBIL score. Thus, borrowers trying to enhance their CIBIL score should avoid applying for too many loans together, if not necessary. 

Keep All Loan Accounts 

Lastly, borrowers must try and maintain old loan accounts and credit cards as the age of the credit history is directly related to one's credit score—the older a borrower's credit history, the better their CIBIL score. Therefore, borrowers should not close old loan accounts and credit cards. 

Check Your Credit Information Report from Time to Time 

Lastly, sometimes a borrower's credit score also goes down due to errors in a report. Therefore, borrowers should check their report from time to time and make sure there are no errors in it.

Improving and maintaining a good CIBIL score is important. It is also easy. All a borrower needs to do is develop a basic understanding of various factors that affect a borrower's CIBIL score and keep the information mentioned here in mind while using credit cards and availing and paying off loans.

How Long Does it Take to Improve Your Credit Score?

The amount of time it takes to improve one's credit score report depends on the borrower's CIBIL score. If you have defaulted too many times in the past and your CIBIL score is way too low, it will easily take a few months for you to improve your CIBIL score. However, if your CIBIL score is around 700 and you just need to give it a bit of a push, you can expect to see changes within a few weeks or months. However, in general, if you are trying to improve your CIBIL score, be patient. 

Final Words 

Your CIBIL score is one of the first things that borrowers will check when you apply for a loan. The importance of CIBIL score, therefore, cannot be undermined in the loan application process. Borrowers should check their CIBIL score report from time to time and make sure it is error-free.