Whenever you apply for a loan or a credit card, the bank makes a credit enquiry, which is reflected in your credit report. Such enquiries appear at the bottom of your CIBIL report under the “Enquiry Details” section. Once in a while, you may come across an inquiry that you don’t recognise. It can be an unauthorised or erroneous enquiry. In this article, we will understand what is an unauthorised or erroneous loan enquiry, and how to remove it from your credit report.
What is a credit enquiry?
In a CIBIL report, at the bottom, under the “Enquiry Details” section, you will find the various enquiries made by banks for the credit products you applied for. For example, whenever you apply for a loan or a credit card, the bank will make an inquiry. You will find the details of that enquiry in the “Enquiry Details” section. Each enquiry entry has details like the name of the bank that has made the enquiry, the enquiry date, and the enquiry purpose (loan or credit card). A hard enquiry stays in your credit report for a couple of years.
What is an unauthorised or erroneous inquiry?
You must check your credit report regularly to ensure the credit enquiries reflected are legitimate. Once in a while, you may see an enquiry for a loan or a credit card that you don’t recognise or remember applying for.
Whenever you see such an enquiry, you must check your records to see if you have applied for that particular credit product. The enquiry details will have the bank name, enquiry date, and purpose. Based on these details, you must check your records.
If you don’t find any details in your records, it may be an unauthorised or erroneous enquiry. An unauthorised enquiry means it has been done without your consent or approval. An erroneous enquiry may mean someone else’s enquiry is mistakenly reflected in your credit report.
Soft and hard enquiries
If you spot any inquiry you don’t recognise; the first step must be to check whether it is a soft or a hard enquiry. A soft enquiry doesn’t impact your credit score adversely. However, a hard enquiry leads to a fall in your credit score.
Unrecognised enquiry can be a fraud
In the earlier section, we saw how an inquiry you don’t recognise can be unauthorised or erroneous. If it is an unauthorised inquiry, it can be a fraud done through identity theft. Someone may have got access to your KYC details and applied for a loan in your name. If they default on the loan, it will affect your credit score and report badly. After a default, getting a new loan or credit card from any bank will be challenging.
On the other hand, an erroneous inquiry can be a mistake. The mistake may happen at the time of entering the details like the name, PAN, etc. It may lead to the enquiry getting mapped to your credit profile erroneously.
How to remove an unauthorised or erroneous loan enquiry?
Credit Information Companies (CICs) have a dispute resolution system on their website. For example, if you come across any inaccuracy in your CIBIL report, you can raise it through the “Consumer Dispute Resolution” system on their website.
You must log in to your dashboard, fill out the dispute request form, and submit it. The CIC will take up the unauthorised or erroneous loan enquiry with the respective bank that has done the enquiry. Please note that a CIC cannot make any changes to your credit profile on their own. A CIC always gets the data from the bank, runs its algorithm on the data, and arrives at the credit score.
Once you submit the dispute, you will get a service request number to track the progress. The turnaround time (TAT) to resolve the dispute is 30 to 45 days. However, most disputes are resolved much earlier than that.
If the enquiry is erroneous, the bank will map it to the correct account holder. Once the bank does that, the erroneous enquiry will be removed from your credit report. If the enquiry is unauthorised, resulting from fraud, the bank will thoroughly investigate the matter. Based on the investigation results, the bank will take corrective action and remove the enquiry from your credit report. The bank and CIC will keep you informed about the investigation and the action taken.
Once the CIC/bank informs about the removal of the enquiry, check the latest updated credit report to confirm the same.
Benefits of removing the incorrect enquiry
Getting the incorrect enquiry removed from your credit report has benefits, some of which include the following.
1. Restoration of earlier credit score: Every hard enquiry results in your credit score dropping a few points. When you get the incorrect enquiry removed from your credit report, your credit score gets restored to the same level as it was before the enquiry. In short, the impact of the enquiry on the credit score gets reversed.
2. Increase in credit limit: Every loan enquiry, based on which a loan is disbursed, reduces your available credit limit by the loan amount. A reduced available credit limit affects your loan taking ability. For example, based on your current income, suppose you are eligible for Rs. 10 lakhs loans in total. If an unauthorised enquiry has been made and basis that a loan of Rs. 1 lakh has been disbursed, it will reduce your available credit limit by Rs. 1 lakh. In this scenario, your loan taking ability will be reduced by Rs. 1 lakh.
Once the unauthorised enquiry and loan details are removed from your credit report, your available credit limit will increase by the loan amount.
3. Lowers the number of credit enquiries reflected in the credit report: Every additional enquiry in your credit report can impact your creditworthiness. On seeing too many credit enquiries in your credit reports, banks will consider it credit-hungry behaviour. Hence, the removal of every unauthorised or erroneous enquiry contributes towards improving your creditworthiness.
A good credit score and report are your gateway to credit products
You must fulfil the eligibility criteria to get any credit card or loan from the bank. One of the most important eligibility criteria is having a good credit score and report. Unauthorised or erroneous credit enquiries can pull down your credit score. An unauthorised enquiry can also be due to fraud.
Hence, you must check your credit score and report regularly to keep an eye on any unauthorised or erroneous credit enquiries. If you spot one, you must act swiftly to get it removed from your credit report. A good credit score and error-free credit report is your gateway to get loans and credit cards without any hassles.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.
