Credit Report Mistakes That Lower Scores and Cause Loan Rejections in India

Incorrect entries in credit reports are becoming a major reason for loan rejection in India. Even small mistakes can quickly bring down a borrower’s score and increase credit risk.

Credit scores now guide almost all lending decisions in India. Banks check bureau data before deciding loan eligibility, interest rate and repayment capacity. Because of this, any credit report errors or credit score errors can weaken a borrower’s profile even when EMIs are paid on time. With more digital loans processed instantly, errors now create faster rejections. 

The Mint report published on 8 December 2025 highlights how wrong personal details, delayed lender updates and mismatched repayment records are affecting thousands of applicants.

How Reporting Errors Reduce Credit Scores and Block Loan Approvals?

India’s credit reporting system is regulated under the Master Direction – Credit Information Companies (Reserve Bank) Directions, 2016, last updated on 26 September 2024, issued as RBI Serial No. 72/2024. The document is available on the RBI website under Regulations > Credit Information Companies.

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Banks must send updated repayment data every month. But delays, manual entry mistakes and system mismatches continue to create credit score errors. A 2025 analysis by LoansJagat found that 20 to 22 percent of loan applications get delayed or rejected because of inaccurate bureau entries.

The most common issues include:
 

Many borrowers discover these mistakes only when lenders reject applications or offer higher interest rates than expected.

How These Issues Emerged Over Time?

Credit bureaus earlier depended on quarterly data submissions, which led to missing or outdated information. After repeated complaints, the RBI tightened rules through the Credit Information Companies Regulation Act, 2005, and successive directions.

A major change came on 27 December 2023, when the RBI announced weekly score updates through the CIC Data Submission Amendments (Circular No. RBI/2023-24/CI-Weekly-01). This aimed to reduce delays and give borrowers more accurate, near-real-time score visibility.

Even with stronger regulations, Indian fintech advisors reported through 2024 and early 2025 that disputes related to active-closed loan mismatches and duplicate accounts grew. Borrowers often had to contact all four bureaus separately because each maintains independent data.

Here is a breakup of how often major reporting issues appear:
 

These consistent issues show why monitoring all bureau reports regularly is essential.

What Experts and Lenders Are Saying?

Financial experts told Mint that the most damaging mistakes include late-payment tags on timely EMIs, mismatched PAN numbers, outdated address details and closed loans listed as open. Dev Patel of 1 Finance noted that borrowers should check reports at least twice a year and keep all closure certificates and repayment proofs safe.

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Lenders also stress that a borrower should raise disputes with each bureau separately, as correcting one report does not automatically update the others.

Conclusion

Regularly checking reports helps borrowers fix credit report errors early and avoid scoring drops. Clean credit data remains the strongest foundation for smooth loan approval in India’s fast digital lending system.