CIBIL Score – Error & Misconceptions

The inaccuracy in your credit report might occur from the bureau’s end or if you submitted any incorrect information. A credit report error might have a negative impact on the CIBIL score. You must identify and rectify any errors in your credit report, since they can have an impact on your creditworthiness. You should inform your lender and raise a dispute, the moment you discover any error in your credit report. 

Types of Errors in CIBIL Report

There are certain types of errors that can occur in your credit report and can lower your CIBIL score. Some of the common types of errors that can occur in the credit reports are:

  1. Account or Personal Information Mismatch:- Typos in an address, a birth date, or a spelling mistake in a name are all frequent mistakes that may be fixed.
  2. Incorrect Account Tagging:- Due to clerical errors or unlawful identity usage, another account that you do not own may appear in your credit report.
  3. Days Past Due (DPD):- Your payment is past due if DPD shows anything other than ‘000’ or ‘XXX.’ If you have paid the payment but DPD still shows an amount greater than ‘000,’ the lender or credit bureau made a mistake. To rectify any inaccuracies, just fill out an online dispute resolution form. The credit agency will delete the inaccuracy after validating it with the original facts. Make sure you provide the exact details when checking your credit score.
  4. Closed Account Error:- Even if you have paid off your credit card, this mistake may still remain on your credit record. The lender most likely did not tell TransUnion CIBIL. To correct this error, find the closed account on your credit report. Check with the lender to determine if the account has been closed and reported to the credit bureau. If the account has not been cancelled, provide them with the necessary details and seek a No Objection Certificate (NOC). It will be deleted from the report whenever the bureau gets new data.

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Misconceptions about the CIBIL Score

Some of the common misconceptions that people say would lower your CIBIL score are:

  1. Never Requested Credit:- Banks will have to do a more extensive examination to determine your creditworthiness and repayment ability if you do not have a credit history. As a result, when analysing your loan application, they will take extra care. Avoiding credit is advantageous, especially if you do not use it for any of your financial needs.
  2. Generating a CIBIL Score:- If you don’t have a credit history, you might be tempted to apply for credit cards and modest loans to build one. This is terrible idea since it will be evident to credit institutions that you are attempting to establish credit rapidly. As a result, when you do a CIBIL score check it would decrease.
  3. It is Good to Overuse Credit:- When the credit limit on a credit card is surpassed, the credit utilisation ratio increases (the ratio of credit card balance to credit limit). It is advisable to keep the ratio as low as feasible. If you opt to expand your repayment obligations, your credit score may suffer.
  4. Guarantor’s Score will Constantly Rise:- You may have agreed to act as a guarantor on a loan application for a friend or family member, but this might hurt your credit in two ways: if the applicant fails on his loan, or if you are financially committed to meet the guarantee’s responsibilities.

5. Closing Old Accounts:- Because credit cards are considered unsecured loans, some of you may be ready to terminate an old account. Your credit score may suffer, as a result. You may be able to expand your borrowing options by leveraging an old credit card account with good payment history.

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