A person’s credit score or a credit report is one of the most widely used instruments to check his creditworthiness. The score depends not only on the volume of good loans taken but also on the repayment record. It is not only financial institutions which assess your credit score to decide the extent of loan that can be provided.
There are several companies who check a prospective employee’s credit score before finalizing their offer of employment. In case you are going through a separation and divorce, the judge would surely take a look at your credit score. The thinking behind this is that a person’s credit history tells us about the behavioural traits he would exhibit.
Because of these reasons, it is a major inconvenience when the credit score is erroneous for some reason. There could be several reasons for this. The most common reason is that your repayment is done on the last day, and by the time your payment hits the lender’s books, they have already taken the dump of repayment data. But apart from this reason, the other reasons are all some kind of error on the part of the lender or on the credit rating agency, or even some error on your part.
So when you see a credit report which you know is wrong, these are the things you need to do immediately:
- The first thing to do is to check all your loan documents and see if your name has been misspelt or your address wrongly mentioned in any of them. Conversely, you need to check if some loan not taken by you is showing up on your report because that borrower’s name or address was wrongly mentioned to match your name or address.
- It is never a good idea to hold off repayments when you see such errors. You cannot unilaterally declare that you will stop repayments till the error is rectified. Therefore, in order to get the best of the situation later, you need to keep on making your regular repayments till the issue is resolved.
- You need to inform both entities. First, you should intimate the error to the lender who has provided the loan or the credit card where you notice a discrepancy. Additionally, you also need to notify the agency that is responsible for generating the credit report.
- All such intimations should necessarily be recorded, and you should be able to present proof later that you had intimated the concerned agencies immediately. That is why sending emails (no one writes letters anymore, though that would have been the best) is better than making a phone call. If your email service provides the option of ‘receipt confirmation’ or ‘read confirmation’, then you should activate that as well, so you have a record that your email was actually received and read.
- It is not enough to register a complaint with the concerned agencies. Such disputes often take a long time to be resolved, so you should be prepared to write several emails and make several follow-ups.
- Some disputes occur because a repayment delay would still be showing on your report even though you have still closed it or repaid it. The reason for this is that depending on which country you are in, the non-payment continues to show up for a period of 3 years or 7 years even after you have repaid it. You must check for the vintage of that late payment or non-payment.
- Finally, one big error that people make while clearing loan or credit outstanding is to assume that a one-time settlement is enough to wipe their slate clean. In case you have made a one-time settlement by paying a negotiated amount slightly lesser than your outstanding, that loan will still continue to feature in your report. So you should go and have a full and final settlement by paying the complete dues including interest accrued and penalties levied.