September 27, 2022

Common Errors &; Misconceptions About CIBIL Score

cibil score

Any issues on your credit report might be the consequence of a past error you made. Another possibility for inaccuracies in your credit report is that the agency made a mistake or that you provided wrong information to the credit bureau. Furthermore, any errors on your credit report may affect your CIBIL score. As a result, you should go over your credit report and address any errors. If you see an inaccuracy on your credit report, contact your lender right away and file a dispute. Because a mistake on your credit record might drop your CIBIL score even further.

Errors in a Credit Report

Inaccuracies in credit reports can develop in a variety of ways, decreasing your CIBIL score. It is recommended that you create a CIBIL score login in order to check your credit score and report on a frequent basis. The following are some of the most common errors that may appear on your credit report: 

Personal or account information that is incomplete or incorrect 

Any misspelling in your name, address, or date of birth is a common mistake that may be easily fixed. Minor mistakes, on the other hand, have the ability to lower your CIBIl score.

Incorrect Account Tagging 

As a consequence of clerical errors or fake identity usage, any account that you do not own may appear on your credit report. 

Days Past Due 

If DPD shows anything other than ‘000’ or ‘XXX,’ your payment may be past due. If you’ve finished paying but the DPD still indicates an amount more than ‘000, the credit agency or lender may have made a mistake. Fill out an online dispute resolution form if you make a mistake. The credit bureau will evaluate the complaint and correct any errors after full validation with the original facts. Before sending the information to the credit bureau, it is critical to double-check it.

Error in Account Closure

This error may remain on your credit report even after you have paid off your credit card debts. The lender has most likely not notified the credit bureau. Locate the closed account on your credit report and contact the lender to see whether it was closed and reported to the credit bureau. If the account has not yet been cancelled, provide the necessary information to get a No Objection Certificate (NOC). When the bureau receives fresh information, it will delete it from the report.

These were some of the errors and misconceptions about CIBIL score that people have in India. 

Misconceptions

People believe that certain CIBIL score myths will lower their result. Some of these misconceptions are as follows: 

Never Seeking Recognition 

If you have no credit history, banks will have to do a more thorough investigation to determine your reliability and ability to repay. As a consequence, they will take additional care while reviewing your loan application. If you do not utilise credit for any of your financial demands, avoiding it is favourable.

Examining Your CIBIL Score 

If you don’t have a credit history, you may be tempt to apply for credit cards and small loans in order to start one. This is a bad idea since credit companies may notice your attempt to obtain credit rapidly. As a result, your CIBIL score will be lower when you check it. 

Excessive Credit Use Might be Advantageous

When a credit card’s credit limit is exceed, the credit utilisation ratio increases (the ratio of credit card balance to credit limit). It is best to maintain the ratio as low as possible. If you opt to raise your payment responsibilities, your credit score may suffer.

Credit Score of the Guarantor will Improve

You may have agree 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 defaults on the loan or if you are financially forced to satisfy the terms of the guarantee.

Get Rid of Old Accounts

Some of you may be ready to close an old account because credit cards are considerd unsecure loans. As a result, your credit score might suffer. You may be able to increase your borrowing possibilities if you have an older credit card with a strong payment history. 

These are some of the common misconceptions concerning one’s CIBIL score. However, if you have a low score, there are various steps on how to improve CIBIL score that you can follow to increase and achieve a high score.

 

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