How do I Take Old Stuff Off my CIBIL Report?

Remarks of late payments, and “settled” accounts can be detrimental to your CIBIL score. If not addressed in time these could cause a significant damage that can take forever to repair. By learning how to correct CIBIL report you can save yourself from the efforts that you would have to invest for credit repairing in future.

Late Payments

One of the most common factors that affect your CIBIL score, and turn away potential lenders is the mention of late payments in your report. Late payments are the no. 1 reason behind low credit score in India. This is because the damage they cause is incremental and often unnoticeable in the beginning. People don’t really worry as they should be when they miss an EMI or credit card payment, even though every single payment matters.

When people come asking how to increase CIBIL points then the first thing financial gurus do is take a look at their payment history, for most of the damage is usually done by late or missed payments. The damage cause by late payments is directly proportional to the delay. Late payments are divided in four different buckets, which are- 30, 60, 90, and 120. So, if you make the payment within 30 days after the due date then it would fall in the first bucket, if you make it within 30-60 days then it would fall in the second one, and so on. As it can be guessed easily- the damage in the first bucket is the least and in the last bucket the highest.

How to Remove Late Payments?

The only way you can get the mention of late payments removed from CIBIL report is to convince your lender. You should first become punctual with your payments, and after a while request your lender to have the remarks removed. If you have been a good customer of the institution then they can certainly send an update to CIBIL, which will then update your report accordingly.

Settled Incidents   

When a borrower has a huge outstanding amount and has not made any payment in a long time then the lender could tag them a defaulter. Eventually, the lender may decide to propose a settlement, in which the they are willing to close the account once and for all by settling for an amount that is lower than the actual pending payment.  If the borrower agrees then the ledger is closed, but their CIBIL report bears a mark of “settled” status. This is enough to raise alarms for future lenders, as it shows a lack of credibility.

How to Remove “Settled” tag?

To get the “settled” tag removed from your CIBIL report the first thing you have to do is contact your bank, and let them know that you are willing to pay the remaining amount of the loan that you had closed with a settlement amount. If the lender agrees then once you have paid the amount you can request them to update CIBIL with the new information. Once CIBIL receives the update from your lender it will update your report, which you can check for confirmation after 30-45 days.

Apart from getting bad remarks removed from your CIBIL report there are many other things that you can do to improve your score.  Here is how to increase CIBIL points

1) Variety- If you only have taken secured loans in the past then you can get some unsecured credit, such as credit cards to increase your score. Variety in credit is always a score booster.

2) Lower Credit Utilization- Do you often use your credit cards to their maximum limits? High credit utilization can lead to lower credit scores. Ideally, you should not use more than 30% of the credit provided to you on the cards.

3) Limited no. of Credit Cards and Loans- When people use multiple credit cards and take loans frequently then lenders can take them for credit hungry individuals. Thus, this kind of behavior should be avoided.

Taking bad credit history off your credit report is certainly a great way of boosting your score, and improving your chances of loan approval in future. Still, it is far better to avoid such situations rather than dealing with them later.

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Why is it Important to Monitor Your Free Credit Reports?

How would you feel if you want a home loan for your dream house but no bank would approve your loan application? Not very good, isn’t it? That’s exactly how Mr. Sindhu was feeling as he was becoming frustrated with the rejected loan applications that he had submitted to various banks.  After a few of his initial applications were rejected he thought he needs to try harder, and he sent many more applications to other banks simultaneously. However, contrary to what he expected none of the applications was approved. He was clueless, unsure of what to do. Fortunately, when he talked to his friend about the problem he, his friend, advised him to get a free cibil report online and analyze the same. He took his advice and got his copy of free credit report India. To his dismay he found that his friend was indeed right as he noticed that his CIBIL score was quite low.

A large number of people are so caught up with their lives that they hardly get time for paying attention to their CIBIL report. However, when a time comes when they need a loan they realize that their negligence has caused their score to suffer and so they face tremendous trouble in getting their application approved.

If you will talk to any credit management expert they will undoubtedly emphasize on the importance of credit report monitoring. Not only monitoring of credit report is a smart habit it has a number of advantages too. Here are some of the best advantages of monitoring your credit report-

1) Maintaining High Credit Score

One of the primary advantages of monitoring credit report is easy maintenance of high credit score. By regularly monitoring your report you can detect problems that are lowering your score early and fix them before a lot of damage takes place. This way you can keep up a decent score without working too much.

2) Identity Theft Prevention

One of the best ways you can prevent yourself from an Identity theft is by monitoring your credit report. By checking your credit report every once in a while you can notice the signs of identity theft. For instance, if you find unknown names, account numbers, or unfamiliar transactions in your report you could be victim of identity theft.  You can immediately contact your bank and file an FIR to prevent any further damage. On the other hand, if you don’t have the habit of checking your report frequently you could become a victim of identity theft and not even know it. By the time you come to know about the situation it could be too late.

3) Detecting Inaccuracies- One of the most common reasons why people get a low credit score is discrepancies in their report. Wrong or inaccurate information sent by your bank could easily cut a huge chunk of score from your report. By developing a habit of frequent credit report monitoring you can detect these mistakes and have them corrected by either contacting your bank or the CIBIL authority itself.

4) Managing Finances- You can manage your finance better if you keep a track of your transactions, EMIs, and credit card payments.  Your credit report carries the information of all your recent transactions, bills, and payments, thus, allowing you to easily manage your finances. You could have your own separate file of finances but a credit report works as an excellent finance summary.

A lot can go wrong if you don’t pay attention to your credit report. Many people don’t take their credit score seriously and pay heavily for the same in future when they least expect it. Thus, it is better to detect upcoming issues sooner and nip them it the bud rather than be careless and find yourself swamped in a mess of problems later.

Can You Get A Credit Score From Your Bank?

Credit management is a big responsibility. The way you handle your EMIs and credit cards can directly affect your loan approval prospects in future. To ensure you are on the right track it is important that you keep a check on your credit score on a timely basis.

There are various ways you can get a credit score such as-

  • Your Bank- Some banks and even loaning companies do provide CIBIL score to their customers on a monthly basis. You can either check your score by logging in your account on their website or they may provide you the same on your monthly statements.
  • Credit Score Service Providers- Owing to the significance of credit score today many websites have emerged on the web that provide free CIBIL check online While some of these websites only provide you a rough estimate of your exact score by analyzing your credit history and payment patterns some of them do actually provide the exact score.
  • The Authority- There are different credit bureaus in India that can be approached for your credit score. These are CRIF High Mark Credit Information Services Pvt. Ltd. , Experian Credit Information Co. of India Pvt. Ltd, Equifax Credit Information Services Pvt. Ltd, and Credit Information Bureau India Limited. Out of these four 4 CIBIL is the most widely accepted one. Majority of banks are associated with CIBIL only and so if you want your credit report you can fill out a form on CIBIL website and pay a nominal fee. You will receive your detailed report along with the score.

There are many things that can hurt your credit score and inquires made on the same is one of them. Basically there are two types of inquiries- soft enquiry and hard enquiry. While the former doesn’t affect your credit score in any way the latter does so slightly.

Soft Enquiry- A soft enquiry is the one that is made by you. For instance, if you just want to check your score then you can get your report from CIBIL. This will be a type of soft enquiry. You can get your report any number of times you want but your score will never be affected.

Hard Enquiry- Hard enquiries are made by your lenders or banks when they have to make a lending decision. For instance, when you need a credit card then your bank will first make an enquiry to CIBIL to see if you have a decent CIBIL score. Only if they are satisfied with your report and score you will get your credit card. The problem with hard enquiry is that if your loan or credit card applications are rejected multiple times then your score will be damaged even though you are not obtaining what you seek(credit card or loan). Thus, credit management experts always recommend that you only apply for loans when you have a good score first.

Enquiries on your credit score should always be made with caution. Too many hard enquiries on your report could cause a lot of damage and make things even worse. If your bank doesn’t provide credit score to its customers it is best that you get your copy of report from CIBIL itself. You can also look for websites that offer the same. Just make sure that they don’t make a hard enquiry as that would be counter-productive.

How to Avoid Hard Enquiries?

If you are going to apply for a loan or a credit card you can’t dodge a hard enquiry. However, you can minimize the damage by apply for loans around the same time. For instance, if you are comparing different loans available in the market then it is better if you apply for them simultaneously. Chances are that CIBIL will recognize the pattern and understand that you are only trying to get the best deal possible. This should minimize the damage to your score. However, if possible you should apply for loans only when you feel your score is high enough to get an approval.

Know why your loan applications are getting rejected

There has been a whooping increase in the Non-performing assets (bad loans) of the banks in the past couple of years. Hence they have become extra cautious while disbursing loans to the borrowers. They follow a rigorous process of evaluating the applicant. Several factors like the age, income, job stability and CIBIL score are considered to judge the ability of the borrower to repay the loan back. Even the slightest doubt about your creditworthiness may lead to a prompt rejection of the loan application.

 

If your loan application is rejected, it may be a serious blow to your financial plans, especially when you do not have alternatives to finance your immediate requirements of cash. But rather than dwelling on this unfortunate outcome it is better to find out reasons that have led to the denial. Try to pinpoint the cause of rejection and work on that area. A little effort can help improve your financial picture and make you eligible for a loan approval in the future.

 

Here are some most common reasons why your loan application might get rejected.

 

Poor credit history

 

All banks and financial institutions look at your CIBIL Score and CIBIL report to analyse the risk associated with approving your application. A low CIBIL score is a warning sign to the lenders that you may not be worthy of lending money. Most banks have a cut-off score, below which they out rightly reject the applications. Apart from the CIBIL score they also see the remarks on the CIBIL report. Foreclosure, bankruptcy and court judgements show you as a high risk borrower. Even defaults on previous loans, skipped EMI’s, late payments or pending credit card bills are strong reasons of rejection. Make sure you build an impressive credit history before you apply for a loan.

 

Too many borrowings

 

If you have taken too many loans in the past you are seen as a credit hungry individual who is overly dependent on borrowings. Irrespective of whether you were able to honour your debts or not banks maintain a distance from such high risk profiles. They feel that an over leveraged person may not be able to bear the burden of additional EMI payments. Even a high income figure does not give them enough assurance that you will not default in the future.

 

Inadequate income

 

Your income is the key factor that influences a bank’s lending decision. Banks check your income to debt ratio to understand whether you will be able to honour the monthly repayment of loans. Adequately document all the sources of income and attach the tax returns of past couple of years to support as a proof.

 

Unstable job

 

Banks also place a lot of importance on the stability of your job. If you have switched several jobs in the past year, or if your job is temporary, banks may not be assured of a regular stream of income and you may not get an approval. Some banks even require you to be employed in a particular company for at least three years in order to be eligible for a loan. Banks even check the financial health of the company in which you are employed to assess your job security.

 

Previous rejections

If your loan application got rejected in the past it shows up on the CIBIL report. This greatly reduces the chances of future loan approvals. If you are denied loan once it is not wise to keep applying for loans unless you have worked upon the reason of rejection. Each time you do so, banks make an enquiry of your CIBIL score, which causes a further dip in the score. If you know that bad credit history is the reason for rejection, then you should work towards improving your CIBIL score and wait for at least six months before making a fresh application.

Insufficient credit information

Your CIBIL score depends upon how well you have serviced your loan obligations. But if you never took any loans before, you will not have any records in the CIBIL report to prove that you are a dependable borrower. In this case you will not have a CIBIL score. Since banks have no way of judging your repayment behaviour chances of rejecting the application are high. You can start building your credit history by taking secured credit cards. Use them to make monthly purchases and pay of the bills on time. Timely payments on the credit cards will get recorded on the CIBIL report and help build your CIBIL rating.

If your loan application gets rejected the first thing you should do is to check your CIBIL score and get a copy of your CIBIL report. Analyse it and create a plan to improve your credit history. Get your finances back on track so that you are confident when you submit your next loan application. If the reasons for denial are not associated with the CIBIL report then make sure you work on them before submitting another loan application, otherwise a series of rejections will hurt your CIBIL score. All it needs is a little patience and commitment and you can ensure things to move in your favour.