Do Not Call
Know the meaning of ‘Written Off’ and ‘Settled’ status in a CIBIL report and its implications. Check effective steps to remove it and boost your creditworthiness.
The ‘Accounts’ section of your Credit Information Report (CIR) contains details of your credit accounts, like loans and credit cards. These accounts may be updated with a status by the lender. Two such statuses are ‘Written Off’ and ‘Settled’. Both of these can reduce your eligibility for loans and credit cards.
Since this status stays in your credit history for up to 7 years, it can make it difficult to access credit in the future. You will see this status in your credit report if you have not been able to repay your loan in full.
However, you may also see this status if there is an inaccurate reporting of credit behaviour or a fraudulent loan in your name. Sometimes, closed accounts may be mistakenly marked as ‘Written Off’ or ‘Settled’.
In such cases, it is crucial to know how to remove the ‘Settled’ or ‘Written Off’ status from the CIBIL report.
‘Written Off’ status against a loan or credit card mentioned in your CIBIL report is an indication that you have not made full repayment. This is usually after non-payment for a certain period (typically more than 180 days).
In such a case, the lender writes off your loan from their books. You are still legally required to repay the outstanding amount during this period. The lender will report the issue to TransUnion CIBIL. After this period, the financial institution may contact you and agree to a one-time settlement.
This is usually of a lesser amount than what is due. When you pay this agreed-upon sum to the lender, the status is changed to ‘Settled’.
Here are the implications of having a ‘Written Off’ or ‘Settled’ status:
This negative remark will impact your credit score, reducing your score significantly by 50 to 100 points.
Since this status shows irresponsible financial management, you may face difficulty in securing another credit facility in the future.
Even if a lender provides you with a loan, the interest rates will be much higher than the available rates for regular customers with good credit scores.
If you find any inaccuracy in your credit report, you can raise a dispute with TransUnion CIBIL to get it corrected. An inaccuracy in this context means that your credit account status may have been misreported by the lender.
For example, a loan fully repaid might be incorrectly shown as 'Settled’ instead of 'Closed,' or after paying off dues post-negotiation, the 'Settled' status may still remain unchanged. In such cases, correcting these errors is crucial to maintaining a healthy credit score and an accurate financial record.
If you are sure that there are no errors, here is how to remove the written off status from a CIBIL report:
Start by downloading your most recent CIBIL report and review it carefully to identify which account has been marked as 'Written Off.' Ensure that the status is still reflected and note any discrepancies or errors. This report will also be essential when discussing the issue with your lender.
Contact your lender to know the exact amount that you owe them. Contact your lender and explain your grievance regarding the incorrect 'Written Off' status. Request the lender to review their records and rectify the error if applicable.
If it is not an error and dues are genuinely pending, ask them to share the exact outstanding amount.
Discuss and negotiate with the lender about an effective way to repay the loan, especially if the amount was marked as written off due to a temporary default or delay.
If the written-off status is a result of an old settlement or overdue balance, show your intent to repay fully. In many cases, lenders are open to revising the status to 'Closed' after full repayment.
Ensure that you follow the repayment plan with discipline to clear your ‘written off’ status.Once a repayment plan is finalised, stick to it diligently. This shows your sincerity and willingness to resolve the issue.
Once you have cleared your dues, get a No Dues Certificate (NOC) from your lender as proof of full repayment of your loan.
This is a critical document that confirms you no longer owe anything to the lender. It acts as proof in case your credit report still reflects the written-off status incorrectly. Keep this document safe for future reference.
The lender will inform CIBIL about the full repayment of the loan, which will be reflected in your CIR in a few days. Review your CIBIL report and score in a few weeks to ensure this is done.
Raise a dispute with CIBIL for your ‘Written Off’ status if your report is not updated. When raising a dispute, remember to show proof of the loan repayment for quick resolution.
Getting a ‘Written Off’ or ‘Settled’ status removed from your CIBIL report can be a lengthy process. Moreover, rebuilding your credit after getting this status removed is also a gradual process. To avoid such issues, take these proactive steps:
Before applying for a loan, assess your ability to repay it
Research different loan options to get a loan that best suits your needs
Consider opting for a loan that extends low interest rates with longer repayment tenures to make your EMIs more manageable
Manage your budget by avoiding unnecessary expenses so you can pay all your dues on time
You can remove the ‘Settled’ status from your CIBIL report by repaying your outstanding dues. Ensure collecting the No Dues Certificate from the lender and then check the report again. The status will be removed when the lender informs TransUnion CIBIL about the payment.
Yes, the ‘Settled’ status means that you have paid a part of the outstanding amount, with the lender accepting less than the full amount owed. The ‘Written off’ status means not paying the dues for 180 days or more. These terms are often used interchangeably but have different meanings.
The ‘Closed’ status in your CIBIL report indicates that a particular credit account has been closed because you have repaid the debt in full.
To change the ‘Settled’ status in your credit report, you will need to submit the No Dues Certificate.
To avoid being marked with the ‘Settled’ status in your CIBIL report, repay the entire amount you owe. This may be for a loan or a credit card.
The ‘Settled’ status negatively impacts your credit score, indicating irresponsible financial management. It stays on your report for up to 7 years.
The time it takes to remove the ‘Settled’ status from your CIBIL report depends on various factors. These include how quickly you can clear your outstanding dues and when the lender updates your status.
Yes, a ‘Settled’ status in your credit report can hurt your creditworthiness. It brings down your credit score and affects your chances of loan approval for at least 7 years.
