Ever thought of approaching a lending institution for credit requirements? What if your loan application is rejected because of a bad credit score? And that too due to inaccurate and outdated information in your CIR (Credit Information Report)? Well, this is a common scenario as several people have errors in at least one of their Credit Reports. To tackle this issue, you need to monitor your credit score periodically. It is very important to keep your credit report clean if you wish to avail of loans in the future.
Any errors in your Credit Report may drag the credit score down. This may deprive you of availing of credit facilities from banks and NBFCs. This is because your credit score is the primary indicator of your creditworthiness. Lenders consider the score to decide on your loan application. A good Credit Score helps you receive the desired loan amount.
It also gives you a great negotiating power about other terms and conditions on the funds. A strong Credit Score also means you can get the funds at a lower rate of interest. In many cases, insurers quote lower premiums for customers with a good credit score. Now that you understand the importance of an error-free Credit Report as well as a high Credit Score, we will discuss a few tips on fixing errors in a CIR.
- Access Your Credit Report
You can access your Credit Report once a year for free from all major credit information companies (commonly known as CICs) by visiting their official website. In many cases, there is a mismatch in the accounts reflected in reports of various CICs. So, it is important to check your Credit Report for errors or misreporting at regular intervals. Also, keep an eye on the shifts in your Credit Score. Report the errors in time so that your Credit Score does not take a hit.
- Analyze the Information in the CIR
After you receive the CIR from the CICs’ websites, you need to analyze them for any error. Any negative attribute in the report should be monitored meticulously. All negative attributes would not be reported erroneously; some may be due to actual irregularity in your accounts. You have to deal with them differently. While analyzing the reports, you should take care of clerical errors too such as spelling of your name as per the CIC, father’s name, PAN number, Aadhaar number, address, etc.
In many cases, accounts of other people are reflected in your Credit Information Report. In addition, you need to observe personal information, account outstanding balance and sanctioned limits, payment history, and loan status very closely.
- Report the Errors to the Credit Bureau
If you find any inaccurate information in your CIR which does not pertain to you, report it immediately to the respective CIC. The credit bureau will take the necessary steps to rectify mistakes in your CIR. Firstly, you must take note of all the issues in the report. Then write a letter to the CIC. In the letter, you have to request the removal of inaccurate information. Also, you have to submit documentary evidence justifying the same. You can submit the claim either by post or by email.
In case your request for the removal of inaccurate information is not entertained, you may approach the CIC again. Getting the rectifications done in the CIR is not so easy and quick. Ideally, it takes around 30-45 days to get your report rectified as the CICs investigate the issues and then act on them accordingly.
- Manage Irregular Accounts
To tackle actual irregularities in any of your accounts, you need to prioritize the repayment of the accounts depending upon the amount in ascending order. Rather than paying installments of regular accounts, you should first try repaying the irregular accounts. The accounts with which can be regularized with lower amounts should be prioritized. You have to manage and pay off the amounts in a phased manner. Repaying your irregular/outstanding credit card the foremost is the best tip to clean your Credit Report.
- Clear Late Payments
Late payments such as delayed/missed EMIs are recorded in your CIR. These in turn hamper your Credit Score. You may request your lender to delete such instances from your Credit Report. This step can help improve your Credit Score. The lender has the discretion to accept the proposal depending upon their policies and your reputation/relation with them.
- Lower the Credit Utilization Ratio
A high credit utilization out of your available credit limit may negatively affect your score. Consumers having a lower utilization of available limits are likely to have a better credit score. If you use too much of the sanctioned limit indicates your dependency on loans. If you use only a minimal or a lower amount of approved credit limit, then your Credit Score will get stronger, and vice-versa.
Your Credit Score is important when you seek a loan or a credit card. Keeping it as high as possible will assist in the journey of borrowing and accessing credit facilities. The information in your CIR influences Credit Scores. Thus, make sure to keep your Credit Report free of mistakes.