Does a Name Change Affect Your CIBIL Score?

First of all, let's understand what a CIBIL score is.

A credit score is a numerical representation, ranging from 300 to 900, that reflects an individual's creditworthiness. Essentially, it signifies a person's capacity to repay a loan. Among the various factors lenders assess when evaluating a loan application, the credit score holds paramount importance as it summarises the borrower's repayment history.

A higher credit score suggests a lower likelihood of defaulting on a loan, making banks and NBFCs more inclined to approve the loan. Conversely, a lower credit score indicates an undisciplined credit history, reducing the prospects of loan approval. Hence, it is recommended to regularly check your credit score (ideally once or twice a year) and take appropriate measures to improve it. This is especially important because it is pivotal in influencing loan or credit card application approval.

In India, we have four credit bureaus that calculate credit scores:

- TransUnion CIBIL

- Equifax

- Experian

- CRIF High Mark

The primary purpose of these bureaus is to rate an individual or a business entity after collecting and analysing their respective credit data and repayment history. Banks and NBFCs across the country largely use the CIBIL score from TransUnion Credit Information Bureau (India) Limited (TransUnion CIBIL).

Nevertheless, the significance of a credit score extends beyond those actively seeking credit. It can increase your access to attractive insurance choices and project a more responsible image to potential employers.

Your credit report that shows your credit score consists of your credit history of your loans and credit cards, past payments, credit limits, and individual details, such as your bank account details, PAN, etc. Among these, your name stands out as a crucial element in your credit report.

Your name serves as a key factor for lenders to retrieve credit scores and reports while processing a loan application. Additional information included in the credit report is usually derived from accounts and cards bearing the borrower's name. It underscores the importance of accurately spelling the borrower's name consistently on all the important documents.

Since the borrower's name plays a crucial role in the credit report, the question arises - does a name change affect your CIBIL score?

It is essential to understand that changing your name has no impact on your CIBIL rating or credit history. However, since these records are associated with you, it is crucial to promptly inform your banks about any changes in the spelling of your name or surname due to marriage, divorce, or any other reason. The banks will then update your personal information and relevant documents within a specified timeframe.

When you notify the bank or lender of your name or surname change, the credit bureau is informed of this update by the respective bank. Although your records are automatically adjusted, your credit score remains unchanged.

Nevertheless, it is important to note that this data modification doesn't occur instantly. There may be initial confusion and a delay in the lender processing your loan application, as your records are still in the process of being updated and are temporarily inaccessible to the lender.

What should you do if your name is changed?

You might consider changing your name for various reasons, such as marriage, divorce, or the need to correct a spelling mistake in your documents. Whatever the reason, it is crucial to notify your banking partners of the name change.

While in most cases, once your lenders update your name in their records, it is automatically reflected in your CIBIL report, it is advisable to also inform CIBIL directly about the name change.

Important considerations before changing your name:

- Your name is typically updated in your CIBIL report after notifying your lenders.

- It may take up to 30 days for the updated name to be visible on your CIBIL report.

- You might have to follow up with CIBIL to monitor the progress of your name change and address any potential delays.

What if there is a delay in informing the credit bureau?

If your name has changed and you have not yet communicated this to your banking partners, it can create confusion for them. There is a possibility of mistaken identity, potentially leading to alterations in your CIBIL report. In the worst-case scenario, you might find yourself associated with the credit liabilities of a different individual. Therefore, it is important to promptly inform both CIBIL and your banking partners of any changes to your name.

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Once your name has been updated in the records of all lenders, it is essential to monitor your CIBIL report until the change is duly reflected. As discussed earlier, it is advisable to notify CIBIL about the name change concurrently with informing the lenders, facilitating faster processing of your request.

Why checking the credit report is important?

It is crucial to review your credit report for inaccuracies regularly, and this becomes especially important after making changes to your name, whether it involves the spelling or surname. Once you have notified both the credit bureau and the lender about the name change, it is advisable to wait for a month and then request your credit report. This report allows you to verify whether the credit bureau has successfully updated the spelling of your name. Since your eligibility for loans or credit cards depends on your credit report, it is essential to keep it updated.

Banks are mandated by Reserve Bank of India regulations to diligently examine your credit report before approving a loan. Therefore, it is vital to ensure the accuracy of your credit report.

So, altering the spelling of your name or changing your last name due to marriage or divorce does not affect your Credit/CIBIL Score. The key is to be proactive and inform your lender promptly, as this information is passed on to the credit bureaus.

To conclude:

You must have understood that a name change does not impact your CIBIL or credit score; however, it can create significant confusion. It is important to note that a name change is a complicated process involving various legal documents like a marriage certificate or divorce decree.

To initiate the name-change process, inquire with the banks or lenders to understand the necessary formalities for updating your name in their records. After clearly understanding the required steps, apply the name change, accompanied by the relevant supporting documents. Be meticulous in filling out the forms provided by the banks to avoid errors in the details of your name. Furthermore, wait for the updated bank statements to confirm that the changes have been made. After ensuring that your information has been effectively revised with the banks, proceed to check in with CIBIL. Once you ascertain that your CIBIL records have been appropriately updated, you can then proceed to secure approval for your loan.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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