Correcting Credit Report Errors: A Step-by-Step Guide

The RBI has proposed a unique borrower identifier to reduce duplication and misreporting in credit bureau records. Until this is implemented, borrowers must handle errors in their credit reports themselves. Common errors include incorrect names and addresses, phantom loans, mismatched account numbers, and outdated loan status. Borrowers can dispute errors on the bureau site and alert lenders with supporting documents.

The Reserve Bank of India (RBI) has proposed a unique borrower identifier to address issues of data duplication and misreporting within credit bureaus. This initiative aims to improve loan accessibility and reduce errors in credit reports, which can negatively impact borrowers' creditworthiness [1].

The RBI deputy governor, M Rajeshwar Rao, highlighted the importance of a secure, unique borrower identifier during his keynote address at the 25th anniversary of TransUnion Cibil. He emphasized that credit information companies rely on accurate and validated IDs to avoid duplication and misreporting. Without this, the risk of errors and disputes remains high [1].

The introduction of a unique borrower identifier is part of a broader effort by the RBI to streamline the credit information ecosystem. This includes the development of a unified lending interface (ULI), which would allow lenders to access verified borrower data, similar to how the Unified Payments Interface (UPI) facilitates money transfers between banks [1].

Additionally, the RBI is exploring the use of programmable digital rupees (CBDC) for targeted lending programs. A pilot project is being tested for tenant farmers under the Kisan Credit Card scheme, which could potentially extend collateral-free loans to small businesses, street vendors, and artisans [1].

Until the unique borrower identifier is implemented, borrowers must take proactive steps to address errors in their credit reports. Common issues include incorrect names and addresses, phantom loans, mismatched account numbers, and outdated loan statuses. Borrowers can dispute errors on the credit bureau site and alert lenders with supporting documents. The RBI has also taken several policy measures to enhance data quality and customer satisfaction, such as free access to full credit reports and appointment of internal ombudsmen [1].

The State Bank of India (SBI) has recently reported the loan account of Reliance Communications Ltd. (RCOM) as fraud due to deviations in loan utilization. This case underscores the importance of accurate and transparent credit reporting [2].

In conclusion, the RBI's proposal for a unique borrower identifier is a significant step towards improving the accuracy and reliability of credit bureau records. This initiative aims to empower borrowers and enhance the overall efficiency of the financial sector.

References:
[1] https://timesofindia.indiatimes.com/business/india-business/rbi-seeks-borrower-id-to-reduce-credit-score-errors/articleshow/122214136.cms
[2] https://www.thehindubusinessline.com/info-tech/reliance-communications-says-sbi-to-report-its-loan-accounts-as-fraud/article69762681.ece