A couple of weeks ago, there was a furore on Twitter when several people found to their shock that their credit reports showed loans that they had never availed. Some discovered these when their credit scores dropped without reason and others when they began to get calls from recovery companies asking for repayment of loans they had never taken. This has brought to fore a new issue of how fraudsters can sometimes take up your identity and make online transactions in your name.

 

In case of online identity theft, the person is not aware about the same and only gets to know when the lender begins chasing him/her for repayment or when checking their credit score online. 

 

This is the number one reason why checking your credit score and credit reports on a regular basis is so extremely important as these reports not only provide a lowdown on the current loans and payments but also of those that were made in the past.

 

So what exactly is a credit score? A credit score is a 3-digit number in the range of 300-900 that depicts your creditworthiness and is based on your credit history. Creditworthiness basically means your ability to repay a loan or card dues in the future.There are many variables on which the score depends such as new debt, credit or repayment history, credit mix and credit utilisation ratio. One of the most important factors is your payment history, which constitutes almost 35% of your total score. All mortgage payments and credit card bills, therefore, need to be paid before the due date in order to maintain a good credit score.

 

A credit score of 750 and above is considered as excellent as it implies that you have regularly repaid your loans and cleared pending card dues on time.

 

One can visit the official CIBIL (Credit Information Bureau (India) Limited) website to check their credit score. Similarly, one can do it at other credit bureau websites too. 

 

Steps to check your credit score

 

Here’s how to check your credit score as a new customer

 

Step 1: Enter details like first and last name, date of birth, gender, email ID, PAN number, mobile number, address, state, city and PIN code on either of the portals mentioned above.

Step 2: Confirm all your details are correct to your knowledge

Step 3: Hit the ‘submit’ option.

Step 4: Get your online credit score.

 

Here’s how to check your credit score as an existing customer:

 

Step 1: You can check your credit score via registered mobile number on either of the portals mentioned above.

Step 2: Fill in the OTP to check your credit score online.

Step 3: Confirm all your details are correct.

Step 4: Hit the ‘submit’ option.

Step 5: Get your online credit score.

 

Considering repayment behaviour is an important factor, any default on a loan severely affects your credit score. Therefore, if any such fraud happens with you the first step should be to rectify it. 

 

Credit scores can surely be improved, but there are no shortcuts. The only way you can improve your credit score is by having sustained repayment discipline.

 

In case your score has got impacted due to identity theft, then the only way is to reach out to the lender and lodge your complaint about the same. Simultaneously, you need to reach out to all four credit bureaus and request the removal of the account from your report. 

 

Credit bureaus then coordinate with the lender and remove these accounts after confirmation from the lender. Once removed permanently, it will correct your credit score. If not corrected, this will have long term implications as future lenders will continue to see this as an actual default, impacting your future borrowing capabilities

 

The process however to do so may be time-consuming, as even after you reach out to the lender informing them about such fraud, the lender will also take some time to decide whether it’s really a case of identity fraud or not. During such a period, non-repayments would have got reported against the impacted party, which would impact credit scores in a significant manner.  You should therefore take up the case with your lender on a priority basis to resolve the issue.

 

Read your credit report carefully

 

Prevention is better than cure. It is therefore important to check your credit report regularly and not just at the time you need to take a loan. One of the ways to safeguard yourself against identity theft is to remain aware of what gets included in your credit report.

 

You shall check out whether all loans or cards mentioned in the report really belong to you and are reflected correctly in your report. Moreover, all closures and repayments of your loans must be reflected properly in the report.

 

Regularly verifying your credit report is the only way you can safeguard against such frauds. Such frauds may happen without your knowledge, but the sooner you get to know about it, the more effectively you can resolve such frauds. Hence, it is very important to check your credit report as a regular habit, preferably every month.