Credit report errors: How mistakes like wrong phone number will impact your credit score? 5 things you must do correctly
An incorrect mobile number, an incorrectly reported loan, or an unfamiliar credit inquiry in an individual's credit report can raise concerns about their credit profile. Now, it is a given that not every error directly lowers your credit score; incorrect information can affect how lending institutions assess an individual’s creditworthiness and may also indicate a risk of identity theft.
It is vital to keep in mind that an individual's credit report and credit score are entirely different. A credit score is a three-digit number provided by leading credit bureaus across the nation, such as CRIF High Mark, Experian, Equifax and TransUnion CIBIL. This metric typically ranges from 300 to 900, with a credit score above 750 considered excellent.
A credit report is a slightly different metric. It records an individual’s borrowing and repayment history, credit utilisation and other relevant details. Therefore, checking it regularly and correcting discrepancies is essential for maintaining an accurate credit profile, which in turn helps an individual maintain a high credit score that can come in handy when applying for new loans and credit cards.
Now let us discuss several factors an individual should get right to ensure their credit score remains healthy and their credit profile remains neat and well-managed.
5 things you must get right in your credit report
1. Check your mobile number and personal details: Ensure your name details, mobile number, address and other identifying data points are correct and updated. A wrong phone number may complicate identity verification and indicate that your details have been mixed up with someone else’s records. It does not automatically reduce your score.
2. Verify loan and credit card accounts: Check whether all listed personal loans, home loans and credit cards belong to you. An unfamiliar account or loan could indicate a reporting error or possible identity theft, which needs prompt investigation and amicable resolution.
3. Check repayment history: Ensure that repayments are correctly reported. An incorrectly marked missed payment or overdue amount could hurt your credit score, as repayment history is an important factor in your credit score calculation.
4. Review credit checks and inquiries: Check whether lenders have made hard inquiries or ‘hard checks’ with your consent. Multiple applications for credit within a short period may affect how lenders assess your profile due to several ‘hard inquiries’, while unauthorised inquiries should be disputed.
5. Monitor credit utilisation: Check whether your outstanding balances and credit limits are accurate. High credit utilisation can affect your score, so incorrect balance reporting should be flagged. You should ensure that your credit utilisation ratio generally stays well within the 25-30% limit of your overall credit limit.
How to correct errors in your credit report?
To rectify any errors in your credit report, it is prudent for individuals to obtain their credit report from their respective credit bureau. After that, if an error is spotted, the individual credit report holder should promptly raise a dispute through the legitimate channels with the bureau and, where necessary, with the concerned lending institution.
Once the process of raising the discrepancy has been completed, the individual should retain the complaint reference number and supporting documentation, and follow up diligently until the discrepancy is resolved.
In summary, a wrong phone number alone may not lower an individual’s credit score; however, errors affecting an individual’s account, repayments, or balance can eventually adversely impact the borrowing profile.
That is why regular checking and resolving disputes can result in helping protect an individual's credit profile and also improve the accuracy of the information that is shared with lenders and utilised by them to assess an individual's borrowing application.