If you want to be financially secure, then you must have a high credit score. This is because your credit score determines how easily you can get loans and credit cards, and also the maximum amount that is offered to you. However, to achieve that feat, you must take several measures one of which is checking your report for mistakes.
Since your credit report is one of the most important documents that a lender goes over when reviewing your loan application, it should contain a high credit score and there should be no mistakes in the information whatsoever.
The common form of mistakes that you may find in your free credit report, are typos or errors. These could be in your personal details, bank account details, etc. Sometimes banks submit wrong information to the credit rating agencies which affects your score negatively. At any rate, you should check your report frequently so that you can identify such mistakes (if you find any) and then have them corrected.
There are various types of mistakes that aren't exactly typos, but can hurt your CIBIL i.e. credit rating. These are:
A lot of times, when people apply for loans, they submit applications to various banks at the same time. They think that their odds of getting approval are higher when there are multiple applications involved. In theory, this is a smart move. However, in reality, it's not recommended as it can hurt your score or turn away lenders.
When you apply for a loan at various banks at the same time, then each one of them raises an enquiry for your credit report with their credit agency to check if your score is high and that you are not on any loan defaulter list. All these enquiries are put on your report which raises a red flag for a potential lender. This is because they can associate it with a "credit hungry" behavior.
It’s not uncommon for the people to take personal loans for education, business, or even weddings. However, too many loans can certainly hurt your credit rating. Even if your rating is somehow not affected much, your report won't make a good impression. This is because no lender would want to approve a new loan for a customer who already has too many loans that are yet to be repaid.
When your name is added to a loan defaulter list, or if you fail to repay the bills of credit cards, then two things can happen. You can either decide to leave the things the way they are, or you can meet your financial obligations later. If you pick the first option, then you may never qualify for a loan ever again which is why it's not recommended at all. However, if you pick the second option, even then you should be careful.
Once you have repaid an old debt, you must make sure that the same has been reported by the lender to the credit rating agency. If you have cleared the debt, but your report still shows it, then the future lenders can be easily misled. So, get a copy of your free credit report and make sure that there is bad debt in your report.
If you have enabled auto-debit service for a bank account, which is something highly recommended, then you should make sure that it has enough funds every month so that the bank can withdraw an amount equal to your loan's EMIs. If there are insufficient funds, then it can lead to late payment which has an adverse impact on your credit score. Moreover, you might be asked to pay a fine for the late payment, which is also undesirable.
So, now you know that errors can be a reasons for bad credit . Some of which are discussed above. Good luck!