Dispute Credit Report: How It Impacts Your Credit Score

Credit score is one of the most important factors in today’s world. It is an asset that helps in managing your financial situation. Credit score is a three digit number that determines your financial ability and behaviour. In today’s world, everything is expensive and it has become economically challenging to survive. But, loans are the most convenient and reliable way to get through this. In order to be eligible for loans and credit cards, it is important to maintain a credit score. Because every lender or bank will consider your credit score before approving your personal loan, home loan, education loan or credit card. 

It’s necessary to maintain a good credit score by being a responsible borrower. But, what if your credit report contains unnecessary mistakes? That’s where the need to dispute credit report entries become important. However, many borrowers are still unaware that due to credit report errors their credit score will decrease unnecessarily. It is important to understand that these are common errors and if checked it can be fixed instantly. This blog is a guide that would help individuals learn how to dispute credit report issues, how it can affect credit scores, how to remove inquiries from credit report, and things one should keep in mind while the process gets carried out.

What It Means To Dispute Credit Report?

The meaning of disputing credit report: It means lodging a formal complaint with the credit bureau in case there is some incorrect information you come across in your credit history. Major credit bureaus in India include CIBIL, Experian, Equifax, and CRIF High Mark.

You can dispute items such as:

• Incorrect amounts lent
• Overdrawn on outstanding balance
• Accounts duplication
• Closed loans marked active
• Late payment entries that are incorrect
• Unauthorized loan inquiries

If there’s anything that you don’t agree with, the bureau checks that information with a lender, and if it is wrong, they correct it.

Why Are Credit Report Errors a Serious Issue?

A small error may affect your score considerably. A lender will judge your capability of paying loans by checking your credit score. If you have enough defaults or excessive outstanding payments recorded in your report, it may result in:

• Loan rejection
• Higher Interest Rates
• Lower approved loan amount
• Delayed Approvals

For example:

This table explains how important it is to correct credit report errors that can instantly improve your financial opportunities.  

Common Credit Report Errors To Be Aware Of:

Before you dispute credit report entries, make sure to read the report carefully. Common mistakes include:

• Personal information errors – Unnecessary information like wrong name, address, PAN etc can cause trouble on your credit report. 
• Incorrect payment history – This refers to inaccurate or fraudulent information highlighting missed late or defaulted payment
• Duplicate loan accounts – This type of error is when a single loan account is listed multiple times. It happens because of various unnecessary reasons. 
• Loans that do not belong to you – This is a sign of identity theft, a mixed file with another person or data entry errors by the creditors. 
• Incorrect “settled” status instead of “closed” – This happens when an earlier completed loan is incorrectly mentioned on your profile as settled instead of closed. Settled shows signs of a weak profile.
• Unauthorized hard inquiries – This happens when a lender checks your credit profile for a loan or credit card application without your permission. 

Checking your report on a regular basis gives you the opportunity to identify problems early.

How to Dispute Credit Report in India:

The process of raising the dispute is simple, and users can disputer credit report online.

Step 1: Get Your Credit Report

Download your report from official credit bureaus.

Step 2: Identify Errors

Incorrect entries were carefully noted, and necessary documents were collected.

Step 3: Raise a Dispute Online

Log into the bureau’s site and fill in a dispute form.

Step 4: Verification Process

The bureau makes contact with the lender to verify the information.

Step 5: Correction

If this information is not correct, it is corrected in your report.

This process may be complete within 15-30 days.

How Disputing Affects Your Credit Score:

Very often, people are afraid to raise a dispute because they think it will hurt their score. In fact, the opposite is

1. Filing a dispute does NOT lower your credit score.
2. If it removes negative information, your score might improve.
3. If the disputed entry is accurate, your score will be the same.

For instance, correcting an error involving a late payment may boost your score by 50 to 100 points, depending on your credit history.

How Long Does It Take to Correct Credit Report Errors?

Here’s a general timeline:

If, within the stipulated time, no response is received from the lender, the bureau can update the record based on available data. 

Tips to Avoid Credit Report Errors in the Future

So that you do not have to frequently dispute problems with credit reports:

• Always pay EMIs on time to avoid falling into unnecessary troubles, as a good credit profile is most likely to remain clean and trusted by the lender. 
• Avoid applying for multiple loan applications in a shorter period of time, as this will create a low credit score and higher chances of getting credit report errors. 
• To maintain a good profile and avoid unnecessary errors, keep your credit utilisation below 30%
• Be a responsible borrower and keep a check on your credit report at least twice a year. This will help you understand and be aware of your credit report. 
• Do not keep unnecessary unused cards open on your profile. If not needed, close these unused cards to maintain a clean profile. 

Financial facilities offered by platforms such as Olyv provide tools that help borrowers in checking eligibility and thereby carefully plan a loan before applying for it. Responsible borrowing keeps unnecessary inquiries and reporting issues at a minimum, thus maintaining your credit profile clean.

Final Thoughts On Dispute Credit Report:

As a borrower, disputing information in your credit report is one of your rights. It is true that there is a higher likelihood for errors to be included in your credit report than many people think. Inaccuracies included in your credit report should be handled with caution because of the negative implications for your future. The right knowledge to remove inquiries from credit report records is a great idea.

As a reminder, if there are errors on your report, it is perfectly safe to dispute them because unresolved errors harm your credit score, but disputing errors doesn’t. Perhaps in prior years, you may have experienced difficulties making payments on loans or settling debts. Now is the perfect opportunity to verify that this isn’t reflected on your credit report because a good credit report is the ticket to getting good loans with low interest rates.

To stay updated, maintain your credit profile, and take necessary steps when required, your credit score is one of your best assets; therefore, it should be managed well.