How Bank Harassment Affects Your Credit Report and How to Fix It
Understanding Bank Harassment and Its Impact
Banks and recovery agents must follow RBI guidelines while collecting overdue payments. However, some use excessive calls, threats, and public shaming, which not only causes stress but also affects the borrower’s credit report. If banks report missed payments or settlements incorrectly, it can lower the CIBIL score, making future loans harder to get.
How Bank Harassment Can Damage Your Credit Report
1. Late Payment Reports
- Frequent follow-ups and threats from banks can make borrowers delay payments.
- Late payments get recorded in the credit report, reducing the credit score.
2. Wrongful Defaults
- Sometimes, banks mistakenly mark a loan as “defaulted” even if payments are made.
- This stays in the credit report for years, making loan approvals difficult.
3. Loan Settlement Impact
- If a borrower negotiates a loan settlement, the bank updates the report as “settled” instead of “closed”.
- A settled loan lowers the CIBIL score and reduces creditworthiness.
4. Increased Hard Inquiries
- Frequent loan applications due to harassment can lead to multiple hard inquiries by banks.
- Too many inquiries lower the credit score and signal financial distress.
Steps to Fix Your Credit Report
1. Check Your Credit Report
- Get a free CIBIL report from credit bureaus to identify incorrect entries.
- Look for wrong defaults, incorrect late payments, or unjust settlements.
2. Raise a Dispute
- If there are errors, file a dispute with CIBIL or other credit bureaus.
- Attach proof of payments, bank statements, and loan closure letters.
3. Request Bank Correction
- Contact the bank’s grievance department to correct false entries.
- If unresolved, escalate to the RBI Banking Ombudsman.
4. Pay Dues on Time
- Avoid delays to prevent new negative entries in your report.
- Set up auto-payments to ensure timely EMI clearance.
5. Rebuild Your Credit Score
- Take a secured credit card or small personal loan and repay on time.
- Maintain a low credit utilization ratio to improve your score.
Final Thoughts
Bank harassment not only affects mental well-being but also damages credit scores. Borrowers should take action against wrongful reporting and improve their CIBIL score through smart financial management. If needed, seek expert help to correct errors and restore financial stability.
