Unhappy with your credit score? Here’s how you can check for errors and rectify

• A credit report is a very important document that gives a complete picture of your financial behaviour and good score can benefit borrowers in many ways.
  
• It is advisable to check your credit report regularly, and as a best practice to review it on a monthly basis.
  
• In the event you spot errors in your credit report, please reach out immediately to the credit bureau from where you have pulled your report, requesting for a correction.
  

A credit score is an individual’s credit report card and it determines not only eligibility but also the rate of interest you pay. It helps the lender gauge whether you can repay it or not. Lenders check your credit score and your credit report before deciding anything. Oftentimes, a loan that has been closed can also reflect on the credit report and sometimes a dispute with a lender can also affect your credit score. Consumers should monitor their scores and rectify errors say financial experts.

“The credit report is a very important document that gives a complete picture of your finances exactly as the lender sees it,” says Adhil Shetty, CEO, BankBazaar.

Why your credit report matters

The credit report is an indicator of your ability to manage your financial life. It tells the lender how disciplined you are in handling credit as well as indicates your ability to repay any credit you have availed. It also provides a clear picture of all your existing liabilities. “All this enables the lender to make an informed decision on whether or not to extend further credit to you, and the terms and conditions at which it should lend,” says Shetty.

Your credit report contains the details of current and closed loan accounts; account opening and closing dates and account status; your payment history; your outstanding balance; all the account details listed, especially the payment history; credit enquires; and your lenders’ details among other things.

“An error in any of this data can have a big impact on your credit worthiness. Today, the credit score is directly linked to the interest rate,” says Shetty.

If you have a good score, you can get the best rates in the market. However, if your score is poor, you may not be able to get a loan despite meeting all other eligibility criteria or be given a loan at a higher rate of interest. So it is essential that you check your credit report and your credit score on a regular basis.

How often should you check your credit report

In spite of due diligence done by banks and NBFCs, errors can creep into your credit report. Apart from errors related to personal details, other errors like days past due date, reporting of overdue amounts and so on can get reflected in your credit report and this would affect your credit score.

“It is advisable to check your credit report regularly. A best practice is to review the reports on a monthly basis. This practice aids in identifying unusual activities or errors that might negatively affect your credit score,” says Sanjeet Dawar, managing director, CRIF High Mark, a RBI-licensed credit bureau. Keeping a close eye on your credit report can help you maintain a healthy financial profile.

How to correct errors if any

“In the event you spot errors in your credit report, please reach out to the credit bureau from where you have pulled your report immediately, requesting a correction. Raise a dispute with the credit bureau to initiate the process. It is also advisable to simultaneously connect with the lender in case of an error related to a specific credit line,” says Dawar.

The credit bureau is not authorised to make any changes to the credit information report (CIR). “All disputes are sent to the reporting financial institution, which ascertains if the dispute is legitimate. The changes have to be authenticated by the concerned financial institution, following which, the credit report can be updated,” says Shetty.

This process may take some time. “Once this is done, the bureau typically requires up to 30 days to resolve the issue. If the investigation confirms the error, you will then be provided with a revised report,” says Dawar.

Make it a habit of checking your credit score on a regular basis, and if you find it has changed drastically, it is important to check your credit report and request for corrections if any.