Lenders assess your credit report every time you apply for a credit product such as a personal loan, credit card, home loan, etc. This credit report can be fetched from one of the four credit bureaus operating in India, namely, TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Where a good credit score makes it relatively easy for you to avail credit, and on your terms, a low credit score, at times, can make it almost impossible for you to avail any credit product. Even if you get one approved, the lender charges a high interest rate or sets stringent terms on repayments.
Having a good credit score shows that you have handled credit in a disciplined manner in the past and makes you a low-risk prospect for the lender. But what if you have managed your credit well in the past, and still, a fraud is impacting your score negatively?
All credit activities carried out in your name and against your PAN are reported to credit bureaus. Any such fraudulent activity, if conducted anywhere in India, will also be reported to the credit bureaus by the lending institution. Once reported, this information shall be added to your credit report. Any such activity has a very high potential to lower your credit score.
If you stay vigilant and check your credit report at regular intervals, you will be able to track such fraud and get it corrected quickly. If not corrected on time, your credit score may spiral down and you will find yourself in a fix when you actually need credit in future. Thus, the most important step to safeguard your credit score from such activities is to check your credit report to analyse for any information that has been added to your credit report without your knowledge.
Types of Frauds in Your Credit Report
There are two most common credit frauds that someone can carry out in your name:
1. New Loan Account
If fraudsters have access to your documents, they can get a loan in your name without you knowing about it.
This is mostly prevalent for short-term loans, where the scrutiny is relatively less.
2. Fraudulent Credit Card Transactions
In case your credit card details get leaked, numerous transactions may be carried out online.
If your credit card is stolen, your card can be used to carry out various transactions through POS terminals.
Where to Find Frauds in your Credit Report?
There can be several ways to find fraud in your credit report. Let us understand some of them below:
1. New Account Added
Look out for all credit accounts in your credit report and check if a new account has been added without your knowledge.
If there’s one, you should raise the issue immediately with the lender and get it closed as early as possible.
2. New Credit Enquiries
In case you find a new credit enquiry in your name without your consent, this can be a potential case of fraud.
It is suggested that you report it immediately to the lender and inform the bureau as well.
3. New Personal Details Added
There can be instances where a new mobile number, email ID or address gets added to your details.
If any of the details don’t match your credentials, you should report it immediately to the lender.
How is Fraud in your Credit Report Different from an Error?
A fraud is any activity that occurs without your knowledge, but all information about the credit product is correct. This is done purportedly for scamming people.
An error may occur if any incorrect information is mentioned in your credit report. It can be due to a clerical error or misreporting by the lender.
When a grievance is registered on the pretext of an error, the information gets corrected within a month by the credit bureau. But, in case of fraud, the issue is reported to the police and a legal action is initiated. The whole scenario can take months to resolve, and the credit score may keep on spiralling downwards in the meantime, making it difficult for you to avail credit. In case of errors, if it is rectified, the credit score recovers in the next cycle.
How to Report Fraud in your Credit Report?
In case you witness fraud in your credit report, you should follow these steps:
Step 1: Check your latest credit report at Paisabazaar from multiple credit bureaus
Step 2: If the issue is mentioned in any one of the credit reports, the issue seems to have occurred at the credit bureau’s end and can be resolved by reporting it to the bureau directly.
Step 3: If the issue is present in all credit reports, you should report it to the lender immediately
Step 4: The lender conducts an inquiry and shares a No Objection Certificate
Step 5: Raise a grievance with all credit bureaus and submit this NOC for authentication
Once the NOC is submitted, the credit bureau removes the fraudulent account from your credit report, and your credit score starts improving.
It is worth mentioning here that your credit score does not fall if you check your report regularly. Instead, checking your score regularly can help track any such issue and get it resolved. Your credit score is hit only if a new enquiry is conducted in your name, either by you or by a scammer.
Common Practices that can Help Save from Frauds
You should follow some common safety practices that can help you safeguard yourself from any fraudulent activity:
- Do not share your Aadhaar and PAN everywhere. If you have to share these documents, do mention the purpose for which the documents are required on the hard copy, along with your self-attestation.
- Check your detailed credit report regularly to see if any fraudulent activity has been reported in your account.
- Keeping your Aadhaar locked will prevent any authentication for your personal and demographic details. You can do this via the mAadhaar app or UIDAI’s website. Know how to lock Aadhaar card services
- Do not keep contactless payments activated for all credit cards. Keep it activated only for the card that you intend to use regularly.
- You can also set a limit for all transaction types on your credit card. This will prevent any high-value transaction from occurring.
- Hotlist your credit card as soon as it is misplaced or stolen. This service is available 24×7. Find how to hotlist your credit card
- Most cards come with a high credit liability cover. Utilise this service if a fraudulent activity has already occurred on your card.
- As soon as you find any suspicious activity in your credit report, report it immediately to a concerned authority. You can also report it to the local police or cybercell, depending on the type of fraud.
