As you have decided to avail a loan being confident about eligibility criteria . As you run through a credit report check you find your credit score has unexpectedly reduced. The first question that will arise in your mind is what should have gone wrong and if it is possible to correct errors on a credit report. Well, going forward these are the questions that this article will answer. A sudden drop in your credit score can occur due to a credit report error in your credit score. Even if you paid your credit card bills or EMIs, there might be some inaccuracies in your credit score. Hence, you don’t need to always hold your financial behavior accountable for any mistake in your credit score. But you can take quick steps to rectify your cibil errors.After you have spotted the errors on credit reports, now read to learn how to fix your credit score like a pro!
Before processing a loan application, a lender checks the credit report and decides the loan amount, interest rate, repayment tenure, and other factors. If any error is detected, the lender will not process any personal loan till you resolve the issue. So, monitoring your credit report is the first and foremost step to avoid any credit report errors.This article is aiming to provide you adequate knowledge about how you rectify this mistakes .Now, let’s start with understanding the common mistakes that are most likely to occur in a credit report.
What Is a Credit Report?
A credit report displays all your financial information, including your investing habits, finance managing skills, and past transactions. These records are usually collected from the banks or lenders you have interacted with. After evaluating all your transactional histories, a credit report agency shows your credit score to show your creditworthiness. Based on the same, a lender decides whether to approve your loan application, interest rate, loan tenure, and other aspects.
One thing you should know is that credit reports and credit scores are different. Most consumers often need clarification on these two. Credit reports are generated based on the information provided by financial institutions and showcase your past and present financial transactions and loan details if you avail of any and other financial transactions. A credit score is a three-digit number that the credit rating agency provides. A credit score of 750+ is always great, but if you have less, there are multiple ways of improving it. But what happens when you have some errors in the report? To make your report error-free, you should review your credit reports every year, mainly before you apply for a quick personal loan. If there is an error, bring it to the credit report agency’s notice and fix it immediately.
How a Credit Report And Credit Score Work?
A credit score and credit report are two primary components for checking financial growth. However, they are two different entities. A credit report is a comprehensive data one report that includes your credit activity and current credit situation like paying history etc. Whereas, credit scores are usually calculated based on the information in the credit report.The Credit Information Bureau of India Private Limited (CIBIL) generates this report by evaluating your credit-related information received from various lenders and shows the overall summary of your transaction history.
Importance of Credit Score
The most significant feature of credit score and credit report is that both components monitor the detailed history of your entire past credit history. They track if you have any discrepancy reports or write-offs or if your account has gone through a hard inquiry.
The significant similarity between credit score and credit report is that both components monitor the detailed history of your entire present and past credit history. They track if you have any discrepancy reports or write-offs or if your account has gone through a hard inquiry. However, you should monitor your credit score frequently to track any such discrepancies. Hence, you should log in to Buddy Score for a brief evaluation report of your current credit score.
A credit score’s importance is highlighting your credit score’s faults and providing other advantages. The advantages are;
Credit scores and reports provide information that is one of the primary reasons for a good credit score. When you check the score and report analysis, you can immediately raise a dispute if you see an error, not from your end. You must report the errors to the concerned authorities when you raise a dispute. If you monitor free credit scores online, you will be informed about the flaws in your credit score and report, along with practical tips to improve it. Free credit score resources suggest tips to improve your credit status even if the flaunt is from your end.
Reduces Forgery –
You can reduce credit fraud and theft during the analysis process. Therefore, if you constantly analyze your credit score, you will encounter discrepancies in your financial activity.
Hence, that’s why you should constantly monitor your credit score. You can also monitor your free credit report online, but you can download the report once a year.
Free Credit Score And Report –
While monitoring your free credit score or report mainly, the alerts will notify you if any significant activity like credit inquiries, history, or negative information is found.
Hence, when you have facilities to check your free credit score and report, it will be better if you opt for something other than the paid ones. The article will further discuss how you can check free credit scores and the fundamental difference between a credit score and a report.
Common Types of Errors That Occur In Your Credit Report
Inaccurate Personal Information
When applying for an instant personal loan, ensure you are consistent with your name and other personal information in every financial document like PAN, Voter, Aadhar, etc. There can be some typographical errors that include incorrect spellings, wrong phone numbers, or addresses. These errors occur in the case of handwritten forms. So, check for credit report errors and get them corrected fast.
Note: Want to get personal loan instantly? Apply Now
Wrong Account Details
There can be multiple account errors in the credit report, like – You may find an open account showing closed or vice versa. An account may show an incorrect credit limit or the date of account opening/closing. Or your repayments may show late or need to be done. If all this happens with your credit report, it can badly affect your credit score.
Data That Doesn’t Belong To You
While checking your credit report, if you find some data or information that belongs to someone else, like a transaction or a loan under your name that you never availed of, then take quick action. This can lead you to fall into a big debt trap without your knowledge. Also, ensure you have cleared off all your previous debts from the report.
Having data more than one time on your credit report may comprise duplicate entries, and this may impact your credit report drastically. So, cross-check all the records and do the needful.
How To Improve Credit Score?
Processing Timely Payments:
If your credit score is not up to the mark currently, you have to be extra careful and prompt in paying off all your credit card bills and other bills on time so that your free credit report shows no significant defaults.
Make online payments while keeping in mind how much time your transaction might take. Hence paying by cheque and ensuring that you drop the cheque timely a few days before the bill due date. That also provides timely payment even in the face of delays that you cannot control.
Abstaining From Too Much Credit:
It is common to get calls and emails from various financial institutions giving credit cards. Sometimes, having multiple credit cards credit will make your life easier. Balance transfers and other card benefits are also supposed to make our financial life flexible.
However, some people have yet to learn to own many credit cards. That shows we are hungry for more credit, and it also lowers our chances of getting additional credit if required.
Also, multiple credit cards can be challenging for a person to keep track of due payments and will enhance the chances of default and late payments.
Good Use of Credit Cards:
Your Credit cards are usually excellent and are a competent financial tool you can own. They provide you with the necessary credit and help us avail of many benefits, like reward points and air miles. Your Credit cards also help us to roam cashless without worrying about refraining from every other ATM.
However, all these benefits only apply if the cards are used optimally. Reaching beyond your credit limit every month can be a wrong move. Sometimes, suddenly closing a credit card is a good idea if you obtain a NOC from your credit card provider.
Having The Right Mix of Secured With Unsecured Loans:
Unsecured loans like personal and car loans can impact a person’s credit score. So, secured loans, like home loans, are more invested towards asset creation and can also impact your credit score positively. Hence, you have to minimize the unsecured component of your credit portfolio to influence your credit score positively. Having the right mix of both secured and unsecured loans also helps.
Check Your Credit Report:
If you have a bad credit score or find any credit report problems, you first have to obtain a copy of your credit report only by applying for it on a credit bureau like the CIBIL score. To check your Credit score, if you have all the information in your name is correct and up to date. If in case no, you can report your CIBIL score immediately, so your credit score isn’t negatively impacted. Also, making payments on time or rectifying defaults and delays can ensure that your credit card issuer or bank records and reports this CIBIL score.
Avoid Applying For Too Many Loans:
One of the common mistakes that you should avoid is applying to multiple banks. Banks tapping can find out your credit score. It will depict you as desperate for credit. So, an inquiry about your CIBIL score will reflect on your credit score & report. The higher the number of inquiries, the more your credit score will dip. Also, there are many good ways to increase your credit score, that is, by keeping your inquiries to a minimum and obtaining a copy of your score personally. After you know where your credit score stands and if it is below expectation, you will, of course, prepare to pay higher rates on loans. Seeking out those banks that will lend you money at the most affordable rates rather than approaching other banks.
How To Fix Credit Report Errors?
These quick, easy steps will help you to understand how to report errors on credit reports and fix your credit report. Check them below –
The first step is to identify the credit report error and connect with an agency to dispute that error. Dispute the error online through your phone or website, fill in the form with all details, and attach the required documents. You can send them an application or write an email.
Connect with the financial institution from where the error occurred. Send them the details you have shared with the credit reporting agency and ask them to rectify the entries and update the same with the bureau.
The concerned person will investigate your request after submitting the dispute. Meanwhile, you will receive an affirmation mentioning the steps taken by the authority. And very soon, you will receive the corrected credit report. Once you get it, you must check the report thoroughly. In case of delay, you can escalate the matter.
Being a responsible person, it’s your responsibility to make your credit report error-free, no matter how small the error is. A single credit report error can bring your credit score down and impact your creditworthiness. So, be careful and take immediate action for all the errors you have in the report. Monitoring it will increase your chances of getting a quick personal loan easily and quickly. The process may seem lengthy, but it will bring value to your financial journey!