Some customers with IDFC First Bank, SBI Cards and Payment Services Ltd., and non-banking financial institutions (NBFCs) like Piramal Finance and Liqui Loans have taken to Twitter to complain about erroneous entries in their CIBIL reports.
CIBIL, or Credit Information Bureau (India) Limited, reports the record of the financial behavior of individuals and companies with details like the repayment of loans and credit cards dues.
The report produces a three-digit score called CIBIL score. Banks check a customer’s CIBIL score maintained by TransUnion CIBIL, an American credit bureau, licensed by the Reserve Bank of India (RBI).
Queries sent to IDFC First Bank, SBI Card, Piramal Finance and Liqui Loans via email were unanswered as of the time of publishing this story.
Majorly, these customers said entries of unpaid credit card dues and loans, for which they never applied, had resulted in banks rejecting their loan application.
Karthikeyan Natrajan, an advocate in the Chennai High Court and a cyber security expert, said he was denied a car loan by a bank because he had 27 unpaid loan entries in his CIBIL report.
“When the bank told me that I had 27 unpaid loan entries, I was shocked. I never applied or thought of taking a loan before. It was only when I approached the bank for a car loan, I got to know that my CIBIL report has these entries,” Natrajan said.
Similarly, Ashish Gupta, a customer with IDFC First Bank, said a loan he never applied for was found in his CIBIL report.
Some customers said that despite complaining to the concerned authorities about these entries, there hasn't been any closure or update on their cases.
Naresh Prakash, an entrepreneur, said that there were errors in his report concerning his SBI credit card about which he complained to SBI and TransUnion CIBIL.
“Over the phone, SBI representatives are telling us that CIBIL report correction was done by us and it is pending from Transunion CIBIL’s end,” Prakash tweeted.
(Naresh Prakash on Twitter: "@CIBIL_Official What about validation of payment proof which indicates that CIBIL report is fake?" / Twitter)
— Naresh Prakash (@nareshprakash) December 27, 2022
https://twitter.com/nareshprakash/status/1607625631814266880
Other customers have said that some of their old loan and credit card dues, which they had paid, were shown as unpaid, affecting their CIBIL score.
Sachin Khurana, a Twitter user, tweeted: “Even after closing my loan with Liqui loans, it is still shown on my CIBIL report.”
Prakhas Bhanot, another user, wrote: “My 7 year old settled account is still reflected on my CIBIL report.”
— Rajeev (@prakash_bhanot) December 27, 2022How does an erroneous CIBIL report impact you?
Experts explained that wrong entries on your CIBIL report can lower your CIBIL score which in turn can lead to instances when banks do not sanction loans.
Natrajan, explaining his case, said: “The wrong entries in my CIBIL report made the bank aware that the customer does not repay his dues and hence, they did not lend me a loan.
A bad CIBIL score by these entries lowers your chances of getting a loan, but banks sometimes consider lending to customers with a bad CIBIL score but with higher interest.”
Experts Moneycontrol spoke to said that the main reason for these erroneous entries was that banks and credit agencies outsource the work to data entry companies and similar agencies.
“After my loan got rejected, I started to explore what the issue was with the wrong entries. It was after this I found out that data entry operators are involved in filing the records,” Natrajan said.
He also explained the process followed by data entry operators.
“When filing data for the report, these data entry operators do not check all the details provided by the banks and credit bureaus. They check the name of the customer and fill the data just by checking the names. Hence, people with the same name get their entries mixed and this creates wrong entries,” Natrajan explained.
Harshala Chandorkar, Chief Operating Officer (COO), TransUnion CIBIL, said: “In instances where the consumer has a dispute on ownership of an account reflecting on her/his credit report, we analyze the same for any incorrect linkage, which may occur due to lack of unique identification or near identical information parameters like name, date of birth etc.”
“If we find incorrect linkage, we will correct the same and inform the consumer. Once the dispute is resolved, we send an updated copy of the credit report to the consumer.”
What are these credit bureaus?
A credit bureau is a company that gathers and examines information on a person's or a company's credit-related activity consisting of loans and repayments, usage of credit cards, overdrafts and so on.
TransUnion CIBIL score helps the borrower to know their credit status and helps the lender to check the credit status of the borrower before lending loans and other services.
Sometimes, details like Permanent Account Number (PAN) or Aadhar details stored with local stationery and photocopy shops can be used to take loans by defaulters which directly affects the CIBIL score of another person.
Kashif Ansari, an assistant professor of taxation and personal finance at Jindal University, highlighted the case of actor Rajkumar Rao, when in April 2022, he tweeted that his PAN had been used to take a loan of Rs 2,500 that affected his CIBIL score.
“Personal details with local shops are sometimes used to take loans from non-credible lenders. Thus, the due diligence and checking process gets eliminated which results in these frauds,” Ansari explained.
Experts also said that identity theft was a major cause of concern in the lending sector of the banks.
Experian’s Global Identity and Fraud Report for 2022 showed that more than half of Indians surveyed feel most vulnerable to online fraud, experiencing fraud mainly on social media sites, payment system providers and online gaming platforms.
“The rising number of cases of identity thefts concerning loan and credit card services have left people worried about these services,” said Nikhil Jethwa, a cyber safety expert.
Chandorkar said that if a dispute pertains to credit information reported by credit institutions, they route the complaint directly to the credit institution concerned.
“We also encourage consumers to access their credit report and review it to monitor the details on their loans and credit cards. Consumers can avail the Free Annual Credit Report (FACR) from our website,” Chandorkar said.
