A credit score is not just a three-digit score but it very well determines a borrower’s creditworthiness. Anurag Sinha, Co-founder and CEO of OneScore and OneCard says, “Banks and NBFCs take a serious note of an applicant’s credit score along with other factors to determine one’s eligibility for a particular credit product that one has applied for.”
Also read: How UPI on credit cards can help you improve your credit score
A lower credit score (typically <750) means the applicant does not have a good credit history and therefore can be declined from accessing any line of credit. Also, if one manages to receive the loan, the interest rates would be generally much higher for such borrowers.
Note that your bank, your lender as well as your credit card issuer, are jointly responsible to submit your repayment history and credit behaviour to the credit bureaus typically on a monthly or quarterly basis. Post receiving this data, the credit bureau formulates your credit score out of 900 and this is then revised every 3 months.
Sinha points out, “While the overall process is very transparent and largely automated, there still might be some errors which should be rectified as and when to avoid any penalty. There is a formal process for rectifying one’s credit score.”
Retrieve and check your Credit Report – There are many platforms/apps online that offer free credit scores to users. You can register and download a free credit report. According to experts, once you have the credit report, you should check all the minuscule details right from your primary name and contact details to any major flaws in transactions or any form of credit discrepancies.
Report the errors to the bureau – Every bureau, Sinha says “has its dispute resolution mechanism in place and the complaints can be registered online through their portals. Complainants should duly fill the form and submit it online along with the proofs backing your claims.”
Bureau investigation – Post submitting the details, the bureau will typically contact you within 30-45 days. The bureau will initiate conversations with you and the lender/ bank and access and verify your claims. After all the necessary investigation, the bureau will rectify the error and make necessary corrections.
Sinha explains, “If the users fail to lodge a timely complaint about any discrepancies, their credit score is likely to go down substantially and it may take a very long time and conscious efforts to reverse the same.”
He further adds, “In the meantime, if the users require a credit, it might be extremely difficult for them to avail the same.”