Maintaining a healthy credit score helps to gain your lender's trust and secure loans or credit cards, especially with attractive terms. Your credit score depends directly on the information in your credit report. Unfortunately, there could be errors in the report which may include minor issues like address change and major concerns like incorrect loan defaults.
You must review your credit data periodically and promptly dispute any errors found with the bureaus. This helps rectify the mistakes before they cause lasting damage to your credit score and loan eligibility.
Errors in credit reports can occur frequently, ranging from incorrect personal information to wrong credit accounts. These errors can adversely impact your credit score, hampering your chances of getting a loan or credit card approval. Check out this Shriram Finance guide to get an errorless credit report.
Types of errors in your credit report
Identity-related errors
These are mistakes in your important personal details, such as:
- Incorrect name - Incorrect first, middle, or last name.
- Wrong address - Outdated or incorrect current or previous residential address.
- Incorrect phone number - Wrong or outdated primary phone number.
- Wrong PAN details - Incorrect details for your permanent account number (PAN).
- Mixed identity - Another person's information is showing under your profile due to name similarity.
Such errors can impact your credit score and imply that the credit bureau needs to have accurate personal information.
Account-related errors
These are mistakes in the loan or credit accounts:
- Closed account still open - An account shows as open even after you have closed or paid it off.
- Unknown accounts - An account has surfaced that has not been initiated or authorized, signaling a possible case of identity theft.
- Incorrect default status - An account shows as defaulted despite regular payments.
- Wrong payment dates - EMI payment dates, disbursement dates or other dates attached to the account must be corrected.
- Duplicate accounts - The same account is listed multiple times, skewing credit limits.
- Old dormant account - The account you closed long ago is still open.
Balance-related errors
This refers to a mismatch in the amounts in your accounts:
- Wrong current balance - The outstanding amount still due on an account must match your records.
- Incorrect credit limit - The approved credit limit or original loan amount on an account must be correctly displayed.
- Other balance errors - The sum of total past dues, overdue, or cash/credit limits must be revised.
Any loan or credit card account details errors that can negatively impact your perceived credibility. Thus, identifying and correcting them quickly helps avoid potential issues.
Steps to rectify errors in your credit report
Here are a few steps that will help you in rectifying the errors in your credit report
Step 1: Review your credit report
- Obtain your free annual credit report from CRIF High Mark, Experian, Equifax, or TransUnion. You can request it online or by mail.
- Review all sections carefully including personal information, account status, repayment history, inquiries, etc.
- Look for errors like wrong personal information, accounts you do not know, incorrect amounts, disputed late payments, etc.
- Write down all the mistakes you see so that you can dispute them. Comparing each item to your records helps you find errors.
Step 2: Contact your credit bureau to fix the errors in your credit report
- Determine which credit bureau's report contains the error and contact them directly.
- You can call the credit bureau helpline or send an e-mail regarding the dispute. Include necessary details like report date, account names, and nature of the error.
- Obtain their dispute resolution form online and request an investigation of the identified errors. Many bureaus allow initiating disputes online through their portal or application (app).
Step 3: Review and submit the dispute form
- Verify all dispute details before submission, including personal information, account names, amounts, dates, etc.
- Attach copies of supporting documents like account statements and payment proofs, among other details as relevant to prove the inaccuracy.
- Recheck the form thoroughly before submitting it to avoid further delays and confusion. Keep a copy for your records.
Step 4: Wait for the credit bureau's response to your credit report dispute
- By law, bureaus must investigate within 30-45 days. They will contact you if they need additional documents or clarifications.
- You will receive a notification once the investigation is completed, usually by mail. The bureau cannot guarantee error removal but must conduct a reasonable investigation.
Step 5: Review the results of the investigation
- Review the bureau's investigation summary detailing their findings and actions taken.
- If changes were made to your report due to the dispute, a free copy of the updated report must be provided.
- If the bureau concludes its investigation without making changes, it must justify its decision. You may initiate another dispute if unsatisfied.
Step 6: Check for updates to your credit report
- After a successful dispute, allow a minimum of 1-2 billing cycles for corrections by furnishers to reflect in your report.
- Order fresh credit reports after a few months to verify if previously disputed errors now stand amended or removed.
- If errors persist, repeat the dispute process highlighting that the issue remains unresolved despite earlier efforts.
You must carefully check your credit reports to find and fix errors. Keep disputing until the problems are solved properly.
How often should you check your credit report for errors?
Checking your credit report regularly is important to spot and rectify errors before they can lower your credit score.
Here are some tips on the ideal frequency
- Request your free yearly credit reports from CRIF High Mark, Equifax, Experian, and TransUnion to conduct an extensive inspection. Review all your personal information, account status, payment history, and recent inquiries sections.
- Complement the annual check by viewing your credit scores every 2-3 months. Services like Credit Karma offer this without any charges. Frequent score checks reveal any sudden drops that necessitate urgent disputes.
- Always verify your credit report from all bureaus before applying for major loans like home or business loans. Fixing errors beforehand maximises your approval odds.
- Be careful in checking reports after any event that can affect your credit, like closing a loan, cancelling a card, changing your address, etc. These events can increase the chance of errors.
- If you find an error in the data from one bureau, check reports from other bureaus too. Information furnished by different lenders might vary across bureaus.
- Consider subscribing to credit monitoring services that automatically highlight critical changes in your credit data. But your review remains essential.
Set reminders to check your credit report and scores at regular intervals. Annual validity means regular annual checks and more frequent reviews to identify errors for quick rectification. Checking your credit regularly is important to build a good credit history.
Tips to prevent errors in your credit report
You can take certain steps in advance to minimise the chances of errors in your credit report:
- Inform credit bureaus about any changes in personal information, like your address or phone number. Outdated data is a common source of errors.
- Track your loan/credit card repayment schedules and due dates to ensure all payments are correctly recorded.
- Maintain copies of financial statements, correspondence, receipts, etc., related to your credits. These help support your claims during disputes over errors.
- If you become a victim of identity theft, immediately notify your bank and credit bureaus. This minimises the risk of errors due to unauthorised accounts.
- Carefully review account applications and statements to accurately record all details like loan amount, interest, disbursal date, etc.
- Go for paperless communications and account statements to avoid data entry errors or missed updates.
- Directly submit information changes to the lenders and reduce reliance on them for updating the bureaus.
- Regularly check your credit reports and scores to identify and rectify errors before they worsen.
While some errors may occur despite taking necessary precautions, being aware and proactive can go a long way in limiting errors in your credit data. Preventing errors in advance saves you from the difficult and lengthy correction processes later.
Conclusion
A good credit report acts as the foundation for your financial credibility. Do not ignore small errors, as they can negatively affect your credit score over time. Be careful when checking your credit data, and quickly begin the rectification process in case of any mistakes. Timely correction of errors ensures you have the optimal credit profile when applying for new loans or credit.
Also, trusted financial institutions like Shriram Finance offer services to check your credit report for errors. Establishing a habit of regular credit monitoring and prompt disputes helps build a robust credit profile.
FAQs
1. How do I correct an error on my credit report?
Review your credit report, identify the error, and contact the credit bureau to initiate the correction process.
2. What is credit rectification?
It refers to correcting errors and faults in your credit report.
3. Who is responsible for fixing an error in a credit score?
The credit bureau and the organisation (e.g., bank or credit card company) are responsible for rectifying errors.
4. How do I remove something from my credit report?
Identify the error, contact the credit bureau, and provide the necessary documentation to support your claim for removal.
Key Highlights
- Regularly check credit reports to identify errors that can impact your score.
- Contact the credit bureau and initiate a dispute process to rectify mistakes.
- Provide necessary documents to support your claim of inaccuracies.
- Credit bureaus and lenders are responsible for fixing errors in credit reports.
