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Accidental Loans Affecting Your Credit Score: What to Do Next

Submitted by admin on June 17th, 2025

The Scary Revealing of an Unidentified Loan

It can be quite shocking as well as frustrating to find unrequested personal loan in your credit report. It has been observed that accidental loans in India are not uncommon as they are usually caused by either fraud, mis-selling by an agent or a technical error. An unpaid accidental personal loan can also affect your CIBIL score to a great extent that you will be unable to negotiate loans, credit cards, or even a home loan in future.

How do Accidental Loans Occur?

What then are the ways in which loans that are borrowed are accidental? In most instances, users have been taken in, believing that they have entered into a loan agreement on their mobile apps or rendered unsolicited credit in the form of disbursements through instant loan apps. There have also been cases when due to clerical error or identity theft the loans have been passed under false name or PAN number. However it may occur, the responsibility is always transferred to the borrower to identify and rectify the problem.

Personal Effects to Your CIBIL Score

The implication on your CIBIL score can be grave. In cases where EMIs in such accidental loans are not paid or are not made in time, this will be perceived as default by CIBIL thereby reducing your credit score. This may make future loans difficult, lower the credit card limit or increase the rate of interest. A low score will also restrict your financial freedom particularly when your score falls below 650.

The first step is to Check your Credit Report

When you suspect or find an accidental loan in your credit report, the first thing that you should do is to check your credit report with credible credit bureaus such as CIBIL, Experian, Equifax or CRIF high mark. Be careful to note the amount of the loan, lender name and its repayment status.

Raise a Dispute with the Credit Bureau

Provide details such as the loan account number, your PAN, and a short explanation about why the entry is incorrect. The bureau will then verify the claim with the lender, which can take up to 30 days.

Contact the Lender for Direct Resolution

In parallel, you should also contact the lender directly. Reach out to their customer service or grievance redressal team with all relevant documents and request them to rectify the mistake. Explain that you never authorized the loan and ask for written confirmation that the account will be removed from your report. Keep a record of all your communications.

Escalate the Issue if Unresolved

If the lender fails to resolve your issue, you can escalate the matter by filing a complaint with the Reserve Bank of India’s Complaint Management System (CMS) or approach the Banking Ombudsman.

Final Thoughts: Take Control of Your Credit Health

In conclusion, accidental loans can harm your creditworthiness, but they are not permanent. With timely action and proper documentation, you can dispute and remove them from your credit history. Regularly checking your credit report and staying informed is your best defense against such errors. Protect your credit score—it’s your financial identity.