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Introduction

An individual's credit score is one of the most important factors that lenders take into consideration. Your credit score represents the condition of your credit report and your creditworthiness as a borrower. Hence, you need to make timely repayment on your loan accounts to maintain a good score. Doing so will also ensure that you never come across the CIBIL defaulters’ list. Defaulting on a loan can drastically bring down your credit score. If things don’t work out as planned and you make late payments, you need to know how to remove your name from the CIBIL defaulters’ list to avoid further damage.

How To Deal With Lawsuits Filed In Your Account?

Defaulting on your loan will lead to a lawsuit being filed against you name by the financial institution that funded the credit. If the value of the debt exceeds the Rs. 25 lakh limit, the same data will get reflected in the public database. To tackle this situation, you can opt for an out-of-court settlement and clear the entire dues. Once the lender agrees to this option, the same will be informed to the court and the lawsuit will be withdrawn. Additionally, your lender will also inform CIBIL about the settlement to update their records. It is important to note that if the lender offers you a concession on the dues, your CIBIL report will reflect a ‘settled’ account. This mark will remain on your report for 7 years and may affect your future applications.

How To Avoid The CIBIL Defaulters’ List?

When applying for a personal loan, the credit institution goes through your credit score and credit history to look for any discordance against your name. To avoid being labelled as a defaulter in your report, you need to work on improving your credit score. Here are a few important pointers on how to clear any CIBIL problems and maintain a clean CIBIL record.

● Assess Your Credit Report

Having a good credit report is crucial to availing any form of credit. If you want to improve your credit report and score, you first need to be aware of your credit transactions and the effects of the decisions you make towards your credit. Hence, it is a good habit to examine your credit history and ensure that all the details in your report are correct. If you find any errors in your credit report, you need to get it rectified at the earliest.

● Clear Off Your Dues

Defaulted or delayed payments are one of the major reasons for a poor credit score. When an applicant applies for a loan, the lender goes through their credit profile; if the report contains a “settled” or “written-off” status, it will make lenders wary of your creditworthiness, and they might reject the loan application. However, once the outstanding dues are paid off and the credit report gets updated with a new status, the borrower can avail a loan with relative ease.

● Ensure Timely Bill Payment

Making timely payment of your debts helps build your credit score. On the other hand, missing your payments negatively impacts your credit score. If you want to maintain a good score, start paying your loan EMIs before the due date. Paying your bills in a disciplined manner will contribute towards a higher credit score.

●  Spend Within Your Credit Limit

When you apply for credit cards, you get a set credit limit on your card. However, you need to be mindful of the payments you make through this card. It is best to utilize only 50% of your credit limit as spending more will only question your financial ability to pay off your dues. Such credit behaviour also negatively impacts your credit score.

● Avoid Multiple Loan Application

Multiple loan applications get reflected as hard inquiries, and multiple hard inquiries will make you look like a credit-hungry borrower. Avoid applying for loans even in short durations as this behaviour will also get noticed and may raise suspicion on your creditworthiness. Therefore, you should apply for one loan at a time to make your loan approval process easier.

All of the above-mentioned information will help you improve your CIBIL score and credit report and improve your borrowing experience. At Finserv MARKETS, the loan repayment tenure for a Bajaj Finserv Personal Loan is quite flexible and usually ranges from one to five years. With the Finserv MARKETS app, you can apply for an unsecured personal loan of up to Rs. 25 Lakhs at attractive rates. You can check for pre-approved offers and get access to value-added services like a free credit score and Financial Health Check Report (FCHR) to help understand your finances.

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FAQs

  • ✔️How many years does CIBIL maintain the record of defaulters?

    CIBIL holds and record the credit report on all individuals. This information is kept for a minimum of 7 years from the date of the first report of delayed payment.

  • ✔️Can a CIBIL defaulter avail a home loan?

    The possibility of availing a home loan is quite low for a credit defaulter. However, it is possible to avail a loan even if the borrower has a low credit score.

  • ✔️How to clear your CIBIL record?

    The following are the pointers to clear your CIBIL record and improve your CIBIL score.

    ●      Cut back on unnecessary spending.

    ●      Check your credit report for errors and get it rectified if found

    ●      Pay your outstanding dues.

    ●      Keep your credit utilization ratio low.

  • ✔️How to remove “Settled” status from your CIBIL report?

    When a borrower is unable to repay a loan amount in full, the lender agrees to a certain settlement amount. However, as the amount is lesser than the total due, the lender reports the loan as “settled”. To change this status, the borrower has to pay the remaining amount and get a NOC (No Objection Certificate) from the lender and file a dispute at CIBIL. The credit bureau will then confirm the information with the financial institution and update the status from "Settled" to "Closed".

  • ✔️How to remove a wrong entry in CIBIL?

    If you find any errors in your report, such as the wrong statement of credit, you can raise a CIBIL Dispute at https://www.cibil.com/dispute/. You are required to fill in some details and mention the corrections in your report. CIBIL will investigate this on its part and correct the details, if applicable.

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