In today's financial world, Credit Score and Credit Information Report (CIR) are important factors in the loan application process. Hence, inaccuracies on your CIR can result in reduced chances of a loan approval. It is very important for every credit-active individual to understand the types of inaccuracies that can occur and what it means for their CIR. CIBIL cannot alter any credit information in your report unless authorized by the Credit Institution (CI).
Usually, there are 2 major issues with a CIR:
Inaccuracies may be found in your CIR
Inaccurate Current Balance or Amount Overdue:
On purchasing your CIR, you may notice that your ‘Current Balance’ or ‘Amount Overdue’ may not be updated for your most recent payment. This is usually the case if you have purchased your CIR within 45 days of making a payment. Credit institutions generally submit the data concerning last payment of dues/ EMI within 45 days, so the latest payment may not reflect on your CIR until the data is submitted by that lender. However, if the ‘Date Reported’ (the date the data was reported to us) associated with that account was over 2 months ago, you can write to us to update this information.
An inaccurate ‘Current Balance’ (especially on the high side) implies that you have more debt than you do. ‘Amount Overdue’ indicates that you are unable to service your existing loan obligations. Both are viewed negatively by lenders and may affect the chances of your loan approval.
Incorrect Personal Details:
Credit information is submitted to us by various Banks and Financial Institutions. Each lender submits your credit account along with your personal information such as name, address, date of birth, PAN, etc. We then use the personal information to collate these details into a single CIR which provides your complete credit profile.
Ensure that you have provided accurate and updated details to your CI at the time of your loan application. In addition, every time your personal details change or are updated you should inform your bank or financial institution so that they are able to make the necessary changes to their database.
Ownership of Credit:
If any personal details or one or more of the accounts on your CIR do not belong to you, you should initiate the Dispute Resolution Process as detailed below.
Overall, the best solution is to check your Credit Score and CIR before you apply for a loan so that you know your lender is evaluating your loan application based on accurate data. If you notice any inaccuracies in these documents, please follow the simple steps below to initiate and complete the Dispute Resolution Process.
Defaults on the payment caused either due to :
- Genuine financial hardship
- Missed payments on credit cards due to relocation internationally/ domestically
- Missed payments on non-receipt of statement
- Disputes with the lender on account of charges or annual fees
- Disputes with the lender on account of fraud
Before we proceed to suggest a course of action, it is important to understand and go through your credit report in detail.
FOLLOW THE BELOW STEPS:
1. Get your free credit report from here (Know how to get your CIR report)
2. Follow the below step by step process to understand your report and identify areas to improve on.
Check how many open accounts there are on your report. There are 2 issues you could face:
The account has not been reported “closed” by the lending institution
There are open accounts which are not yours
This can be easily remedied by following CIBIL’s Dispute Resolution Process. Incorrectly stated open accounts overstate your credit exposure.
Check the status of the accounts
A “written off” or a “settled” account can be viewed negatively by the lender. Check if there is any account which has been tagged incorrectly. If yes, raise a dispute via CIBIL’s Dispute Resolution Process.
Check the payment history of every account
Go through the Days Past Due section carefully. If you notice anything apart from a “000” or an “XXX” then this can be viewed negatively. If you missed some payments, then ensure you pay your bills/EMIs diligently. Your CIBIL Score will begin to improve. You need to wait at least 6-8 months before you can see a positive impact on your score (provided everything else is continues without an adverse change)
3. INITIATE ACTION
To understand the remedial action that should be taken in the afore-mentioned situations, let’s take each example and see what the best alternative solution is:
Inaccurate information reflecting on the CIR
Once you have identified the inaccurate information, initiate the dispute resolution process by clicking here. You should hear back from CIBIL in 30 days. If the respective bank or financial institution re-confirms that the information that was reflecting in your CIR is correct then we will not be in a position to make any changes. It is advisable to get in touch with the concerned Bank directly to expedite the process.
Defaults on the payment caused either due to:
Genuine financial hardship:
If for any reason you missed your payments earlier because of a loss of job or other unforeseen circumstances, then it is advisable to pay back the amount to the bank when your financial situation is better. A clean credit history will enable you to enjoy better credit terms in the future.
Missed payments on credit cards due to relocation internationally/ domestically:
When you are relocating, it is not only prudent to transfer bank accounts or close accounts where necessary, but also manage open loans and credit cards. If the EMI payment is linked to a savings account, then ensure that either that account is not closed (and is adequately funded) or the standing instruction for the EMI debit is transferred to another active account. But in the midst of all this, many a times we miss informing the credit card issuer about the relocation in advance which results in missed payments, late payment fees and other service charges which then snowballs in to a large amount. In such a case, the best solution is to repay the full amount because it is your responsibility to ensure that your dues are paid in full.
Missed payments due to non-receipt of statement:
The terms and conditions of most credit card issuers clearly states that the cardholder is obliged to pay the outstanding amount irrespective of the receipt of the statement. Non-payment due to non-receipt of statement may not be considered a valid reason for missing payments (If this has been covered in the cardholder agreement). If you have not paid the outstanding due to this then the late payment fees, service charges etc would be accumulating. The sooner the issue is resolved, the better will it be for your credit history. It is advisable to get in touch with the bank and work out an optimal solution
Disputes with the lender on account of charges or annual fees:
Before taking up any credit card or loan, one should always go through the terms and conditions thoroughly. One should always enquire about the charges (one time and recurring) such as maintenance charge, fees, issuance charge, processing charge, penalties, interest rates, transfer charges, pre-closure charges etc.
Disputes with the lender on account of fraud on your credit card
In case of fraudulent transaction, the bank will investigate the matter and depending on the findings a charge back may or may not be issued. Such disputes need to be resolved between you and the Bank so as to ensure your credit history is not/minimally impacted.
Follow the below mentioned steps to initiate disputes:
Step 1: Login to CIBIL here with your login credentials created to get your free credit report above.
Step 2: Go to Credit Reports Section and Navigate to Dispute Center & Click on Dispute an Item.
Step 3: Complete the online dispute form. Keep your control number handy.
Step 4: Select the relevant section which you want to dispute.
If disputing ownership, then select dispute type and submit your dispute.
If disputing data Inaccuracies, then Enter value for the disputed field and submit your dispute.
Once you submit your dispute, it will take around 30 days to resolve. (subject to the time taken by the Credit Institution).
I hope that you lodged your dispute successfully to correct your CIBIL report.
If you have any queries, please share with me in comments below.
Please share this article, if there is a need of this to anyone.
Hello, welcome to my blog, Smart Investor. I'm Satyanarayana, a banker & blogger, Investor from Visakha -patnam, India. You can read more about SML here.
No comments:
Post a Comment