Whenever people apply for a loan or credit card, one thing that plays a major role in deciding their eligibility and their application's approval or rejection is their credit score. But what is a credit score, and why is it so essential when applying for any form of credit? When lenders give you loans and banks provide you with credit cards, they are essentially trusting you with a lot of their money. Naturally, they do not trust every applicant, and therefore, not everyone's applications get approved. To judge an applicant's ability to handle credit responsibly and repay their dues on time, financial institutions check their credit scores.

A credit score is a number that can range between 300 and 900. In India, this score is calculated by four Credit Information Companies (CICs) or credit bureaus: TransUnion CIBIL, Equifax, Experian, and CRIF Highmark. Since TransUnion CIBIL is one of the biggest and oldest of these four bureaus, the credit score is also commonly called the CIBIL score. Do not get confused; these are the same thing.

The credit score is a marker of an individual's financial behaviour and use of available credit in their past and is used by lenders to judge their creditworthiness. A higher credit score is seen as good, and that person is seen as financially responsible. People with high credit scores win the trust of banks and other lenders and find it easier to get their loan and credit card applications approved. On the other hand, a lower credit score indicates a higher risk of default payments and an irresponsible handling of credit in the past. Applicants with lower scores usually find their loan and credit card applications rejected. If they do get approvals, the terms and conditions of the provided credit are highly unfavourable for them.

There is no specific number that all financial institutions consider to be a good credit score. However, a score above 700 is usually agreed upon as a good score, and such a person is mostly seen as a trustworthy applicant who can be given additional credit.

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Does a Name Change Affect Your Credit Score?

Your credit score is part of a more detailed document known as your credit report, which is also generated by the aforementioned credit bureaus of India. Thus, the credit score is like a summation of the entire credit report.

The credit report gives all the details about an individual's credit history. It includes information like how many credit enquiries you have made, how timely you pay back your loans, bills, and EMIs, how balanced your credit mix is, what your credit utilisation ratio is, etc. Based on all these different factors, the final credit score is calculated. These factors are also considered by banks and lenders when deciding whether or not to provide a particular applicant with a loan, credit card, etc.

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Personal Information Mentioned on The Credit Report

1. Name: Apart from all these details about your credit history of the last seven years, the credit report also includes your personal information and credentials, such as your full name, any different or alternative names that you have used in your previous applications for loans and credit cards, etc. One person can use different names in cases like the use of nicknames, a name change after marriage, changing the spelling of a name, etc. We will discuss the consequences of a name change further ahead.

2. Date of Birth: A person's full date of birth is always mentioned on the credit report since it is an unchangeable and fixed identity marker.

3. Address: The credit report includes a person's latest address and any addresses they might have had.

4. Phone Number: Credit reports always include an individual's phone numbers they have used with their credit accounts. Make sure to keep your phone number updated with the credit bureaus.

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Impact of Name Change on Credit Score

If you ever change your name, you must get it updated on your credit report by informing the Credit Information Companies of this change. You can change your name for many different reasons. People sometimes change their first names and/or last names after they get married, sometimes people remove their middle names, they might wish to change their name's spelling, etc. Whatever the reason may be, the name must be updated on credit reports.

Your change of name will not directly impact your credit score. It will not lower it. However, if the name on the credit report, the name of the lenders, and the name on your documents do not match, it can create confusion when you apply for loans and credit cards. This confusion of identity will cause a delay in the loan approval process, and in case your identity cannot be verified, your application can even be rejected.

When loan applications are rejected, they negatively impact the credit score. Therefore, even though a change in name does not directly impact the credit score, it does impact it poorly indirectly, and it is imperative that you update your name with the credit bureaus and lenders to match the name on your official documents as soon as possible.

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How to Update/Change Your Name in Your Credit Report?

If you want to update/change your name in your credit reports, here is how to do it:

Step 1: Inform Your Lenders: Once you have successfully changed your name legally and it reflects on your official documents that mark your identity, you must inform your bank or lender about the same. Provide them with the required proof of identity and name change and request that they update your name in their records.

Step 2: Lenders Will Inform the Credit Information Companies: Once you have informed your lenders about the name change, they will make the required updates in their records and inform the credit bureaus about the same. After a short period of time, the name update should also reflect on your credit report.

Step 3: Inform the Credit Information Companies: While it is not necessary, it is a good idea to also mail the four credit bureaus of India, informing them about the change in your name. You can email them at the official email address mentioned on their website.

Step 4: Raise a Dispute if Changes Are Not Reflected: If you have informed your lenders and credit information companies, but the name is still not updated on your credit report, you can raise a dispute on the credit bureau's official website. It takes around 30 days for a name to be updated. If you still see the old name, raise a dispute.

To do so, navigate to the Credit Report section on the official website of the credit bureau and click on Raise a Dispute. You will find a dispute form. Fill it out carefully and provide the following details:

1. Latest name, including first name, middle name and last name

2. Latest name registered with your lender

3. Latest address

4. Proof of name change. This could be an affidavit from the court, a marriage certificate or a divorce settlement.

5. The number of your Aadhar card in case it is linked to your loan account

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Things to Keep in Mind

1. You must remember that even when the credit information companies update your name according to the latest changes, they will still include any and all previous names you have used earlier.

2. A dispute can be raised on the official website of the credit bureaus not only if the changes are not reflected but also if there are any spelling mistakes or other errors. This is important to avoid any confusion and delays while applying for loans.

3. Regularly check your credit reports to stay updated and make any changes if and when required.

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Conclusion

Whenever there is a change in your name - first name, middle name, last name, or spelling - it will not impact your credit score directly. The credit score is impacted by factors that relate to your use of credit and not your personal information and details. However, discrepancies in your credentials can cause confusion and delays when you apply for loans. If loans get rejected because of confusion of names, that would further impact your credit score poorly. Therefore it is of utmost importance that you inform your lenders in case you change your name because of marriage, divorce, or any other reason. Once you inform the lenders, they will update your name in their records, and they will also inform the credit information companies about the same so that the change can also reflect on your credit reports in future. Make sure to provide your lender with proof of name change, such as a marriage certificate, a court affidavit or a divorce settlement. You can also mail the credit bureaus yourself along with informing the lenders, to be on the safer side. If your credit report still shows the old name even after 30 days, you can raise a dispute with them by filling out a dispute form on their official website.

Frequently Asked Questions (FAQs)

1. I have changed my last name after my marriage. How can I change it on my credit report?

If you have changed your name after marriage, inform your bank or lender about the change along with the necessary documents that serve as proof of name change. They will then inform all the credit information companies as well, and the name should be updated on your credit report within 30 days.

2. What documents do I need for proof of name change?

Documents such as marriage certificates, divorce settlements and court affidavits serve as proof of name change.

3. Will changing my name make my credit score less?

No, changing your name will not make your credit score less than it is. Only your credit usage affects your credit score. However, if you have changed your name, you must update it in your credit reports as well to avoid confusion, delays and rejections while applying for loans and credit cards.

4. What factors affect my credit score?

Factors such as how many loan enquiries (known as hard enquiries) you make in a given period of time, how timely you repay your loans, credit card bills, and EMIs, your credit utilisation ratio, how long your credit history is, how balanced your credit mix is, etc. affect your credit score.

5. The spelling of my name on my credit report needs to be corrected. What to do?

If your credit report has misspelt your name, you must rectify it as soon as possible. To do so, you need to visit the official website of the credit information company that has generated the credit report and navigate to their credit report section. There you will find a raise a dispute section. Fill out the dispute form carefully; your issue should be resolved in about 30 days.

6. Do I need to inform all four credit bureaus when I change my name?

No, you do not need to inform all four credit bureaus when you change your name. You need to inform your lender about the change, and they will inform the credit bureaus. You can send emails to the credit bureaus to be on the safer side, but it is not necessary.

7. How can I check my credit score?

You can check your credit score by requesting a free annual credit report from any of the Credit information companies in India. You can also check it on the official website or mobile app of your bank/lender or on FinTech platforms such as BankBazaar, Paytm, Paisabazaar, Cred, etc.