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Your credit score and report form a crucial part of your financial profile. They also impact your ability to access funds quickly and on affordable terms. While your report is generally accurate, there may be instances where it may not represent the correct information.
For instance, you may find that your EMI payments and other transactions are not recorded on your credit report. In some cases, fraudulent transactions may be recorded in your credit report, which also impacts your credit score.
These errors can occur due to various reasons. Thankfully, whatever the error, you can always dispute it and get it rectified. Rectifying the mistake can affect your credit score, and it is essential to know how. Read on to learn more.
Impact of Disputing Errors in Your Credit Report
Check out how disputing your credit report impacts your credit score:
1. Accurate Credit Report
Disputing errors in your credit report results in accurate information being present once the dispute gets resolved. As mentioned, mistakes and discrepancies can happen in a credit report, resulting in an inaccurate credit score.
These errors can occur due to clerical mistakes, outdated information, or missing out on recording certain transactions. By disputing these errors and rectifying your information, your credit score will also accurately represent your financial profile.
2. Credit Score Does Not Get Lower
It is a myth that filing a dispute to correct errors in your credit report leads to a lower credit score. In fact, credit bureaus encourage you to reach out in case any mistakes in your credit report exist.
By bringing these errors forward, you help credit bureaus correct their records and accurately assess your profile. The accurate information also works in your favour, by improving your creditworthiness and helping you access affordable credit in future.
3. Improvement in Credit Score
Many times, there are instances where the information in your credit report is not accurate. For example, your credit score decreases if a late repayment gets recorded, even when you paid it on time.
Another example is that you paid your EMI on time, but your credit report does not reflect the transaction. Such instances lead to incorrect information in your credit report, negatively affecting your credit score.
Successfully rectifying any mistakes, like the ones stated above, helps boost your credit score. This is because by treating the discrepancies, your credit report holds accurate information regarding your credit.
4. Temporary Credit Score Movement During Dispute
When you file a CIBIL dispute or a dispute with other bureaus, your credit score may temporarily go up. However, this will change depending on the result of the dispute. After the rectification, your credit score changes according to the correct information on your credit report.
If the information gets accepted, the score may go up or remain unchanged, depending on the error. If the dispute is not accepted, the credit score will stay unchanged.
However, if the new information comes to light and has a negative impact, such as the limit being lower than reported, your score may go down.
Process of Disputing Errors in Your Credit Report
Here are the steps that you need to follow to file a CIBIL dispute:
Step 1: Obtain Your Credit Report
The initial step in disputing errors is obtaining your credit report. Only after getting your credit report can you evaluate it. Regular monitoring of your credit score and keeping a regular check on your credit report is a healthy financial practice.
Step 2: Go Through Your Credit Report for Discrepancies and Errors
Once you have the report, go through it. Look at every transaction and record, even personal details. This is the best way to catch errors and discrepancies, if any, that affect your credit score.
Your credit report can have various types of errors. This includes inaccurate information, incomplete information or non-recorded information. Here is some information that requires your attention:
- Personal information
- Account information
- Unauthorised credit inquiries
- Unauthorised transactions or accounts
Step 3: Collect Documents and Evidence for Dispute
If you catch any discrepancy in your credit report, you need to file for a credit report dispute. For this, you will need to present the supporting documents that act as evidence to prove your point.
These documents can be anything that proves the transaction, such as your payment receipt, a letter from the lender, a bank statement, etc. With the help of these supporting documents, you can make a stronger case for your dispute.
Step 4: Submit your Credit Report Dispute
After collecting the required documents, you can file your credit report dispute. You have the option of submitting your credit report dispute in 3 ways:
- Online
- Phone
You should keep the necessary information with you while submitting your credit report dispute over the phone. This includes your personal information for verification. If you wish to mail the dispute, send your credit report along with the discrepancies and errors that you found in your credit report.
Step 5: Wait for the Dispute Response
After the successful submission of your credit report dispute, you need to wait for a response from the credit bureau. Checking the discrepancies and verifying them is a time taking process.
This is because the dispute goes to the financial institutions, who then verifies it and responds to it. However, a CIBIL dispute or other credit bureau disputes generally get resolved within a few days.
Step 6: Review the Dispute Response
Once your dispute request is checked by the credit bureau, they will inform you of their findings. If you disagree with the results, you can ask for reconsideration. If your query is still not resolved, you can file a report with the Consumer Financial Protection Bureau.
As you can see, disputing errors in your credit report does not lower your credit score. It is essential that you keep a regular check on your credit report to catch and rectify mistakes at the earliest. Failing to catch these errors can lead to a lower credit score.
Whereas successfully resolving such errors can also result in a higher credit score.
