Find out why your credit report shows a loan you don't remember taking

Loans can be issued to you both legally and fraudulently. So if there's a suspicious entry in your credit report, get to the bottom of the matter immediately

After a recent monetary policy review, Reserve Bank of India Governor Shaktikanta Das said the apex bank has been receiving many complaints against digital lenders. Customers found that loans were disbursed to them without their consent, which led to a drop in their credit scores. Adhil Shetty, chief executive officer (CEO), BankBazaar says, "Recently, several people mentioned on social media that they were surprised to find loans issued against their PANs by lending institutions. Worse, some of the loans had been defaulted on. For no fault of theirs, these people’s credit scores were compromised due to the defaults." If this happens to you, what steps should you take?

Know the reason: Loans can be issued against your name legally as well as fraudulently. Note, that loans are always linked to your PAN. Gaurav Chopra, Co-founder, Indialends, says, "There are four ways in which you can get a loan against your name, or have credit history showing a loan in your name. First, you've taken a loan yourself. Second, you have been a co-borrower or a guarantor to someone. Few know that in such cases, the loan will show up in your credit file as well." Even a corporate credit card from your company will reflect on your credit report. 

Chopra adds, "Third, it's a fraud case, where your KYC documents have been compromised,and the money doesn't enter your bank account, but the loan reflects in your credit report. Fourth, is due to the Buy-Now-Pay-Later (BNPL) scheme, which few realise is actually a consumer loan. And it shows up in the credit history."

Yashraj Tyagi, chief business officer, CASHe says, "Several e-commerce platforms grant you a credit limit or BNPL, but they may not be the actual entities giving that credit. There could be a bank or NBFC at the back end, and it is this entity that could be reporting it to the credit bureau as a loan or credit card." Experts are expecting regulatory clarity on credit limits, credit lines and BNPL soon.

So first find out why you are seeing a loan in your credit report.

How to check and get your credit score rectified

As far as credit accounts like credit cards and loans go, all inquiries and activities are mentioned in the credit report. Shetty of BankBazaar says, "The quickest way to check what’s happening on your PAN is to get a copy of your credit report. Your credit report lists details of all borrowing associated with your PAN." Look at your credit report. Check for unexplained entries in it, or any inquiries you haven’t made. In short, check for any mismatch or discrepancy in data. For instance, was a change of address request made? Or is there a credit card issued in your name that you don’t remember? Or has there been an attempt to avail a consumer loan?

Chopra adds, "The first thing is to reach out to the lender. Ask them to share the relevant documents. It might just turn out to be a BNPL, or a loan that you have co-borrowed or stood guarantor for. In such cases, the loan is genuine. But if neither is the case, then call upon the lender to reach out to the credit bureau and get it deleted from the report. This is very much within the lender's ambit." If it's a genuine fraud, they will post due diligence, and will reach out to the credit bureau to get it rectified. You can also contact the credit bureau yourself, along with the lender.

Harshala Chandorkar, chief operations officer (COO), TransUnion CIBIL, says, "If they find any inaccuracy reflecting in the information, they can raise a dispute on our website." 

Once a dispute has been submitted to the credit bureau on its online dispute resolution platform, it gets routed to the credit institution concerned. If the credit institution accepts the dispute, it updates the information. 

Chandorkar adds, "A confirmation email is sent to the consumer to communicate the status of the dispute and an updated copy of the report is also sent once all the disputes are closed." 

Note that credit information companies cannot make any changes to the data unless authorised by the credit institution concerned. Shetty adds, "If you have spotted suspicious items in your credit report, waste no time in getting to the bottom of the matter to avoid greater financial damage." Even as you get in touch with the credit bureau, informing your lender is the first step. Shetty says, "Document the interactions with the lender and put the matter on record. Written assurance must be obtained to ensure the case is being investigated."

If they aren’t satisfied with the lender’s response, you have the right to escalate the matter through various channels. First, you may approach the banking ombudsman with your grievance. Roochi Loona, associate partner, DSK Legal, says, "At present, the victims of such financial frauds have the option to either lodge a complaint with RBI’s ombudsman (if the lender is a regulated entity) or through the Sachet portal (if the lender isn't regulated)." If that doesn’t suffice, you may escalate the matter to the consumer court or local cyber crime unit.

Preventive Measures: Are there any preventive steps people can take to ensure that loans are not disbursed to them without their consent? In this digital age, try to avoid physical printouts for Know Your Customer (KYC) documents. Insist on using the full digital processes, where Aadhaar is authenticated via the UIDAI portal, and you get a One Time Password (OTP) on your registered mobile. Chopra says, "In case you have to give photocopies for KYC,  mention the purpose there, don't just sign the photocopy." For instance, write KYC documents provided for a personal loan from so-and-so bank on so-and-so date. If you are taking a loan from an app, check for reviews, number of downloads, and the kind of permission they ask for. These are easy red flags to identify.

Tyagi says, "Know who the real lender is at the back end, so you actually know where the money is coming from. Read the fine print, as it is important to understand what the instrument is--loan, credit limit or credit line." Go for bigger players, regulated and licensed entities that work as single-entity platforms-cum-lenders. This will also prevent your data from being shared across multiple lenders.

Tyagi says, "Make credit checks a regular exercise to stay on top of your credit activities."

Step-by-step guide in case of online identity theft

• Identity theft is the deliberate and unauthorised use of someone else’s personal information to pretend to be you to commit fraud or gain financial benefits.
• Check all your accounts to see if multiple accounts have been compromised
• Change all your passwords immediately. Opt for alphanumeric ones
• Contact your banks, lenders, and insurance companies immediately and request banks to close all affected accounts and open new ones
• Contact the credit bureau and raise a dispute and inform the nearest police station or cyber cell
• Check your computer and mobile for viruses and install anti-virus software