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How to Rectify an Error on Your Credit Report?

I have always been very attentive towards my credit health. My credit scores have always been admirable; my credit reports have never received a single derogatory remark. A few years ago, I had applied for an auto loan, with high hopes of purchasing my dream car. Soon enough, I was appalled to discover that I wasn't eligible for an auto loan. Hell broke loose upon me as I couldn't fathom the reason for the rejection. Upon further probe into my credit report (which I hadn't bothered to check earlier), I was shocked to discover that I had a delinquent loan account which I didn't even know of! Of course, it was a reporting error. However, I suffered immensely. The loan was rejected, my car purchase plans were postponed and I had to wait for quite a long time to get the matter sorted.

Mistakes in credit reports are very common as well as blunderous. If they go unnoticed, these mistakes can fatally damage your credit health for no apparent fault of yours. A reporting error can occur for multiple reasons and on multiple aspects of your financial life. It could bring down your credit score and also put you in difficult situations. It could spoil your credit health with a derogatory remark. Lenders can refuse to lend money to you for these errors. Read on to understand how serious these mistakes can be and how you can keep yourself safe from their consequences.

How to Rectify an Error on Your Credit Report?

What Kind of Errors Might Turn Up on Your Credit Report?

Your credit report could contain simple mundane errors such as incorrect name, address, identity numbers like PAN or Aadhaar, gender or date of birth. These errors do not affect your credit score. You need to get them rectified nonetheless.

There could be mistakes in the payment dates, account status, date of loan closure, etc. Such mistakes are severe and will affect your credit score. Your loan application could get rejected or you could be blacklisted by banks due to these errors. If you find one of these mistakes, you need to act immediately.

However, this is not exactly the limit. Errors could be worse. Someone else's loan could appear on your credit report or there could be a mistake in the amount overdue. These errors have serious implication and can harm your credit report considerably.

If you wish to keep your credit report clean, you must keep tracking your credit score from time to time. You can use mymoneykarma's Intelligent Finance Tool to stay on top of your credit reports. Whenever you spot a mistake, act immediately and get it rectified.

Who Makes These Errors?

Compiling a credit report is a multi-layered process. The banks and financial institutions make data entries and submit to the credit bureaus; the credit bureaus aggregate your data from different sources and formulate a report. The errors could occur at both stages.

There could be a plethora of possible errors at the submission stage. The data submitted by the financial lenders are compiled and entered by many people. Human errors are natural. Manually entered data could have typographical mistakes.

There could be other mistakes pertaining to your credit behavior such as payment or settlement status, latest balance, outstanding amount, etc.. Errors could also originate from the time lag between collecting the data and submitting it. Let's assume that your payment date is on the 5th of every month and the lender submits its reports on the 8th - your payment submission might not reflect in the report and your account status might not get updated. Sometimes banks outsource the task of loan collection to third-party agencies, who might collect the amount from you but make a slight delay in depositing the same and informing the bank about it. Cheques might also take time to be processed and hence your submission dates might be erroneously recorded.

At the aggregation stage, there could be manual as well as machine errors. Bureaus generally use complex algorithms to assess your data. There could be computational errors due to unavailability or similarity in personal details. For example, your name could be the same as another person's and his or her loan could appear on your credit report by mistake.

How to Correct These Errors?

Some of these reporting errors could seriously impact your credit scores if they go unnoticed. You must be alert and follow these guidelines to detect the errors and get them rectified.

  1. Spot the Errors

    People generally suffer because they fail to spot the errors in their credit reports. Most of us do not bother to check our credit reports. Instead of being torpid enough to check your credit reports right before applying for a new line of credit, you need to be hyper-vigilant. Scrutinize your credit report intently and spot the errors. You could use mymoneykarma's credit score tracker to keep an eye on your credit.

  2. Take Action

    Once you spot a discrepancy, take immediate action. If the error concerns an incorrectly reported loan (such as a mistake in the date of closure or the amount overdue), approach the lender. The lender will recheck, verify the details and then submit the corrected details to the credit bureau.

    However, if you find critical mistakes, such as a loan that you haven't taken at all, approach the bureau directly to register a complaint. Each bureau has their dispute resolution systems - you can find the forms on their website which can either be submitted online or downloaded and sent via post. Once you register a complaint, the bureau will check with the bank and sort it out. The dispute should ideally be resolved within 45 days of raising the issue. All credit bureaus follow a similar procedure of filing a dispute. Here is a quick overview

    All the three credit bureaus have a dispute filing system on their website. This is the easiest and quickest way of solving your problems. You must follow these steps to file your dispute:

    1. Go to the dispute filing page of TransUnion, Experian or Equifax. (Just click on the names of the bureaus and you will be redirected to the concerned page)

    2. Fill in the form and attach the scanned copies of the required documentation to support your claim.

    3. Submit the form. You will get an email receipt.

    4. The bureaus will start investigating your complaint and you will be alerted whenever there is an update.

    5. The inaccurate data will be removed or changed. Accurate data cannot be removed from the report.

    6. Once the error has been rectified, a fresh credit report will be generated and emailed to you. You can also login to the concerned bureau’s website and view your rectified report.

    Generally, the bureaus take around 30 to 45 days to complete investigation and give you a fresh credit report.

To Sum Up

It is always advised that you inculcate responsible financial behavior. An important part of this responsibility is to make sure that your credit reports are error-free. This requires patience and dedication when you check your credit reports. Keep yourself financially secured by identifying the reporting errors and get them rectified at the earliest. Your financial guide, mymoneykarma, is here to help you in every possible way - click here to check your credit score for free.

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