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What is Written-Off Meaning in CIBIL Report?

To develop a healthy CIBIL record, it is crucial to understand all of its associated elements and terms. A CIBIL report contains details of an individual's credit history such as the number of accounts, name of the lender, loan amount, as well as the payment history. If you have ever read your CIBIL report, you might have come across the term "Written-off". This term is detrimental to the health of your CIBIL score, as it means that the borrower was unable to pay their dues on a given loan or line of credit, and the lender had to ‘write-off’ the loan amount. However, what if we told you that you can get this ‘written-off’ tag expunged to avoid further damage to your CIBIL record and credit score.

How to Clear “Written-off” Status from Your CIBIL Report?

Having a clean CIBIL report is vital to secure new or additional credit. However, there may be times when the report may have some errors due to poor financial management, incorrect information, fraudulent usage, etc. Hence, it is advisable to do a CIBIL report check, i.e. credit score check, once in six months to stay updated. If you have the ‘written-off’ tag marked on a loan/credit account on your CIBIL report, you first need to check whether it is correct. In some cases, a ‘closed’ account can be marked as ‘written-off’ if updated incorrectly. Such errors need to be rectified as soon as possible by filing a dispute online with TransUnion CIBIL.

Check for Possible Errors in CIBIL Report

There are different types of errors that may occur in your CIBIL report. Some of the common errors include the following.

  • Wrong personal information:

There may be errors in personal information such as your name, your gender, date of birth, address or contact information. The PAN or Aadhaar number may also be incorrect in some cases.

  • Delayed updation of balance:

This is one of the most common errors in CIBIL reports. The outstanding balance in your name may not be updated soon enough. In this case, loans you have actually repaid may still be reflected as overdue.

  • Incorrect balance:

Sometimes, the outstanding balance may be updated, but there may be errors in the updates. Due to this, your CIBIL report may show an incorrect balance for your loans or your credit cards. It’s easy to miss these errors, so keep an eye out for them.

  • Errors in outstanding loans:

This section is often prone to mistakes. For instance, the amount of loan taken or the amount of loan due may not be accurate. Alternatively, some loans that you have not taken may be shown in this section, or some loans you may have actually taken may not be reflected.

  • Duplication of accounts:

Lastly, in some cases, there may be more than one account registered in your name. If this is the case, bring it to the notice of the concerned authorities right away, and ensure that your duplicate account is closed to avoid bringing down your CIBIL score.

How to Raise a Dispute via CIBIL Dispute Resolution Process?

The following are the steps for CIBIL Dispute Resolution:

  • Step 1: Go to www.cibil.com, and create an account. If you already have one, simply sign in.

  • Step 2: Select the ‘Credit Reports’ option and click on ‘Dispute Centre’ before selecting ‘Dispute an Item’.

  • Step 3: Fill in the online CIBIL dispute form and choose the relevant section.

  • Step 4: Select the ‘Dispute Type’, enter a value if you are disputing data inaccuracies, and click on ‘Submit’.

Once the CIBIL dispute form is submitted, TransUnion CIBIL will verify the information with the relevant lender, and the status will most likely be updated within a month.

What is Debt Settlement?

Debt settlement is a type of agreement made between the lender and the borrower that makes it easier for the latter to clear their dues. Typically, the lender might reduce the debt by providing a concession on the interest payable. The debt settlement amount and process is based on the type of credit that was availed. Once the agreed amount is paid, the lender would mark the account as "Settled" in the CIBIL report. While settlements also reflect poorly on your credit score, it is better off than the ‘written-off’ status.

What to Ask Before Settling a Loan Account

While it is certainly beneficial to settle a loan account sooner than later, there are some key questions that you need to ask your lender before you settle the debt. Here are some such essential questions.

Does your lender accept loan settlement?

First things first, you need to check if your lender allows borrowers to settle their loans. Most lenders will offer this option if you are able to prove that you are entirely bankrupt and are unable to repay the loan as per the original terms and conditions.

What is the non-repayment period?

Once you have established that your lender does indeed allow loan settlement, you need to check what the non-repayment period is. This is essentially the period during which you need not make any repayments. The longer this is, the better.

How much of the outstanding amount will you have to repay to settle?

After the non-repayment period is over, you will have to pay a percentage of the outstanding amount as a lump sum to settle the loan. Negotiate this amount with your lender, so you can afford the process of loan settlement. The lower this percentage, the better.

How Does a Debt Settlement Affect Your Credit Report?

A debt settlement essentially indicates that you were unable to repay your entire debt as per the schedule. Therefore, loan or debt settlement is bound to affect your credit score and your credit report adversely. It can bring down your credit score and reduce your creditworthiness.

 

That said, loan settlement is still a better option than writing off the entire loan amount. This is because in the former case, you at least repay a portion of the outstanding amount as a lump sum amount.

How to Improve CIBIL Score After Loan Settlement?

Although the settlement of your loan account will tend to ease your EMI woes, a poor credit score would still haunt you for some time, making it difficult to secure a loan anytime soon. Hence, you must take charge of your financial situation and take some rightful steps in order to improve your CIBIL score. Let us find out how to improve your CIBIL score rapidly post a loan settlement.

  • Build a Good Credit Repayment History

The credit report is in fact the first document that a lender would access at the time of considering a hopeful borrower for a loan. Hence, you need to ensure that you build a long and healthy credit repayment history that negates the impact of a few late loan repayments in the past. Ensure that you repay all credit bills and EMIs on or before the due date. Exhibition of a healthy loan repayment behaviour will heal your credit score over time.

  • Clear off Pending Dues

If there are other outstanding accounts, you must ensure that the outstanding balances are settled up. It is due to the fact that credit card balances adversely affect CIBIL scores of people. Hence, the individual must be careful about the same.

  • Manage Credit Cards Better

Sometimes, possessing too many cards can throw CIBIl scores off the rails as an idle unused card could result in default upon non-payment of annual charges, thus causing a red mark in the report. It is due to this very reason that you must check all old cards, and preferably close ones that are not in use. However, you must retain the oldest card to hold on to its detailed history.

  • Apply for a Secured Card

If you do not own a credit card, think about applying for one. Optimal usage of a credit card enhances credit scores and odds of a loan approval. Timely repayment of credit cards will help you build a good CIBIL score quickly. In case it is difficult to get a card, apply for a secured credit card against a fixed deposit. The FD can be as small as ₹25,000. The card provider will then conveniently approve the card with 90% limit of the security.

  • Credit Utilisation

Maintaining a favourable credit utilisation ratio also goes a long way in maintaining a good CIBIL score. Your credit utilisation ratio is a percentage of credit limit used against the total limit granted to you.

For instance, if Priyanka owns three cards with limits of ₹40,000, ₹50,000, and ₹1,00,000 each, her total credit limit is ₹1,90,000. If she spends ₹40,000 every month on each card, her credit utilisation ratio would stand at ₹1,20,000 or 63.2% of her total available limit.

In order to maintain an ideal credit rating, Priyanka must not use more than 30% of the total credit limit available to her. Overconsumption of credit every month will give lenders the impression that you are a credit-hungry individual. Additionally, such credit behaviour is also recorded by credit bureaus, which impacts your credit score negatively.

  • Do Not Raise Frequent Loan Queries

After settling, you need to ensure that you do not look like a credit-hungry prospect. Do not apply or inquire about new loans or credit cards for a few months following the settlement transaction. Loan rejection is quite likely here and can only harm your CIBIL score.

  • Apply for a Secured Credit

A poor CIBIL score makes it more difficult to avail an unsecured loan as compared to a secured one. If you need funding despite your poor CIBIL record, apply for a secured form of a loan and have a backup ready if in case the borrower anticipates defaulting at any given point in time. Alternatively, the borrower can also get a guarantor or co-signer on board in order to tip the scales in the favour of a loan approval.

How Would Lenders Treat You After a Debt Settlement?

Post debt settlement, lenders might be hesitant to offer you unsecured loans as you were unable to pay your previous dues in full. However, there are chances of availing a secured loan by pledging an asset as security with the lender. Also, note that a secured loan can raise your CIBIL score faster if you make timely repayments. You also get access to additional benefits like easy loan approval, lower rates, minimal paperwork, etc.

How To Remove “Settled” Status from Your CIBIL Report?

To clear the “Settled” status from your CIBIL report, you need to pay the outstanding amount on your loan and get a NOC (No Objection Certificate) from the lender. The next step is to raise a dispute on the CIBIL website. The credit bureau will confirm the update with the lending institution and change the status from “settled” to “closed” within 30 days.

Parameters That Determine Your CIBIL Score Post Debt Settlement

There are certain parameters that CIBIL uses to assign credit scores. These parameters are crucial in rebuilding your credit history in the most desired way. They are as follows:

Credit Aspects

Weightage

Credit repayment history

35%

Loan amount the borrower owes

30%

Number of years servicing the debt

15%

Total number of loans availed or applied for

10%

Credit mix

10%

Understanding the elements of your CIBIL record and working on them will help you build your credit information report. It is crucial to have a clean CIBIL report or you might have a tough time availing a loan or line of credit in the future. A score of 750 and above is excellent and gives you the power to negotiate the terms of the loan with the lender. Check your CIBIL report and CIBIL scores every six months to understand your financial standing. You can get a free CIBIL score check online and a Credit Health Report using the Bajaj Markets app to get more insight into your finances.

 

If you have a healthy CIBIL record, you can easily avail an instant loan online with any financial institution. At Bajaj Markets, you can avail a high loan amount of up to Rs. 50 Lakhs with interest rates starting from as low as 10.49% per annum. If you meet the loan eligibility criteria, the online loan process becomes even easier and the loan amount gets disbursed without delays, post the loan application approval. Visit Bajaj Markets, now!