Credit score error denies customer loan

It transpired his account details got mixed up with that of a person with poor credit history

R.Ramesh Babu, a resident of Avadi, was denied a loan from ICICI bank a month ago and the reason cited was poor credit score (a metric used by banks to study the track record and credit worthiness of an individual). Mr. Babu was shocked as he has always been repaying his loans on time.

Credit scores and credit reports are prepared by four credit bureau companies in India — CRIF High Mark Credit Information Services Pvt. Ltd, Equifax Credit Information Services Pvt. Ltd, Experian Credit Information Co. of India Pvt. Ltd and Transunion Cibil Ltd.

These firms source data from banks and assign a score in the range of 300 to 900, which reflects the credit worthiness of an individual and help bank in deciding on giving a loan. The scores are assigned based on algorithms used by each of these firms.

“I had applied for a mortgage loan from ICICI bank and was shocked to learn that I had a poor credit score. When I sought the CIBIL report online, I learnt that another person’s e-mail id and account details were tagged to my account. That person had a poor credit history on loans totalling nearly ₹13 lakh, which was linked to my account,” Mr. Babu said.

The last one month has been strenuous for him as he is been checking with CIBIL and various banks to rectify the error.

“Banks like HDFC and Citi bank took my complaints and agreed that I was not the defaulter. When I raised the dispute with CIBIL, I was informed that it would take 30 working days to process the dispute. The CIBIL’s customer care said they update customers details based on the data provided by the banks and redirected me to the banks,” Mr. Babu said.

He also filed a complaint with police and is mulling further action. CIBIL declined to comment for the story.

Wake-up calls

Experts said such incidents are wake-up calls for customers to cross check the accuracy of their credit score data and get it corrected.

“Usually this kind of mix-up happens when names sound similar. A customer needs to find out where the error happened, whether at the bank’s end or at the credit bureau end. He can access the report from other three rating bureau and see if the details are correct. Based on it he can raise the issue with the bank or the rating bureau digitally. If the issue does not get resolved, he can approach the banking ombudsman,” Harsh Roongta, investment adviser, said.

He suggested that customers take one credit report being made available free in a year and check the accuracy of the data.