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Common Errors & Misconceptions about CIBIL Score

Any error in your credit report can be a result of any previous mistake that you might have made in the past. Another reason for an error in your credit report can be from the agency’s end or if you have provided any wrong information to the credit bureau. Moreover, any error in your credit report can have a negative impact on your CIBIL score. Therefore, it is advisable to check and correct any irregularities in your credit report. As soon as you notice a mistake in your credit report you should immediately inform your lender and file a dispute. 

Types of Errors

There are various types of errors that can occur in your credit report and might lower your CIBIL score as well. Following are some of the most common errors that may arise in your credit report:

1. Mismatch in Personal or Account Information

Any typing error in your name, address, DOB are all common errors and can be easily rectified. However, these small errors can also tend to lower your CIBIl score. 

2. Incorrect Account Tagging

Any account that you do not own can appear in your credit report due to any clerical mistakes or any illegal identity usage. 

3. Days Past Due

If DPD shows anything other than ‘000’ or ‘XXX’ then there is a possibility that your payment is due. However, if you have paid the payment but the DPD still displays an amount higher than ‘000’ then the credit bureau or lender might have committed a mistake. In case of rectification of an error, all you need to do is to fill out an online dispute resolution form. The credit agency will verify the complaint and after proper validation with the original facts, the bureau will delete the inaccuracy. It is advisable to check the information before providing it to the credit bureau. 

4. Closed Account Error

Although you have paid off your credit card bills, there is a possibility that this error can still be displayed on your credit report. It is most likely that the lender has not informed the credit bureau from his end. To rectify this error, locate the closed account on your credit report and check with the lender whether the account has been closed and reported to the credit bureau. If the account has not been cancelled, provide them with the necessary details and seek a No Objection Certificate (NOC). It will be deleted from the report whenever the bureau gets new data.

Common Misconceptions about CIBIL Score

There are some common misconceptions about CIBIL score that people believe can lower their score. Here is a list of such misconceptions:

1. Never Requested Credit

If you have no credit history, banks will have to do a more thorough investigation to evaluate your trustworthiness and payback capabilities. As a consequence, they will take extra precautions when reviewing your loan application. It is beneficial to avoid credit if you do not utilise it for any of your financial demands. 

2. Calculating the CIBIL Score

If you have no credit history, you may be tempted to apply for credit cards and small loans in order to establish one. This is a bad idea since credit institutions may notice that you are seeking to develop credit quickly. As a result, your CIBIL score will drop when you check it.

3. It’s Beneficial to Overuse Credit

When a credit card’s credit limit is exceeded, the credit utilisation ratio rises (the ratio of credit card balance to credit limit). It’s best if you can maintain the ratio as low as possible. Your credit score may suffer if you choose to increase your repayment commitments. 

4. The Score of the Guarantor Will Continue to Rise

You may have agreed to act as a guarantor on a loan application for a friend or family member, but this might damage your credit in two ways: if the applicant defaults on the loan, or if you are financially committed to pay the guarantee’s obligations.

5. Getting Rid of Old Accounts

Some of you may be ready to close an old account because best credit cards are considered unsecured loans. As a result, your credit score may suffer. In fact, if you have an old credit card account with a strong payment history, you can broaden your borrowing alternatives.

Apart from this if you are interested to know about examine and enhance your CIBIL credit score for a business loan then visit our Business category.

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