What Do the Credit Score Numbers Mean?

A credit score plays an important role when it comes to opting for a loan or a line of credit like a credit card. Credit scores are used by lenders and various Non-banking financial services to evaluate your capability to avail a loan and make decision whether they can offer you a credit. The score is a result of your payment patterns, any default payments, any past settlements and many more.

There are many different scores which are available in the market for the lenders like Experian, Equifax and so on but Indian banks and non-banking financial services companies prefer CIBIL as their lead bureau for credit scores. Credit Information Bureau India Limited also known as CIBIL was founded in year 2000. It helps providing credit information to Indian banks to filter loan applications.

There are different categories of cibil score which helps boost your loan application and also gives you added benefits while availing a loan. The score ranges from 300 to 850, each financial transaction either contributes or downturn your cibil score.

Today we will sight the score breakdown and help you to understand what the credit score mean,

Score 0-349

If your credit score is between 0-349 this means you have no lending record. Many of us think to make our purchases on cash and do not take loan for any purpose but a no cibil score is equivalent to a bad cibil score. Always try getting small consumer loans from time to time and make regular payments on the same to see a great hike on your score. This will help you get started with the process and in future if you need a bigger loan like a home loan or a personal loan you will be able to avail a loan with ease.

Score 350-650

If you are in this category of credit score, most probably you have made a lot of financial mistakes like not paying your dues on time also if there is a settlement in your account. This will definitely hamper your chances of getting a loan in future. If you have not made a payment on time the transaction remains in your report for at least 5 years. A low cibil score will always pull you backwards from financial harmony, if you need help with repairing your credit, you can always approach a financial professional.

Score 650-699

This is termed to be a safe zone and you need to work hard to reach in the good score range. If you are in this category it is much likely you will get a loan but chances are you will need to pay much higher interest rates as compared to other options available in the market. Try not to default any loans further and you credit score will be up in no time.

 

 

Score 700-759

This category is called the safe category. In general terms you can easily get a loan from any lender without any hassles. This indicates that you make all your payments on time with almost no defaults and also your credit balances are low. If you are applying for a loan, you will get high priority as compared to others and you can also negotiate on the interest rates offered by the bank.

Score 760+

We can say that, very few people achieve this milestone. You can be in high demand between lenders if you fall in this range category. This credit score range means you have financial integrity and do not default your payment even by mistake. You have a long history of line of credits without a single default. They receive the best offer available in the market and also can negotiate with the lender on interest rates, processing fees and so on. It is really hard to achieve this breakthrough, but is even harder to maintain the same.

A credit score states a lot about you when it comes to financial integrity and how you manage your loan funds. It is a ladder you can use to achieve financial milestones and achieve an easy credit in desperate times, but the same factor can be the worst nightmare of your life and can haunt you for a very long time. Borrow responsibly and repay well to live in financial harmony.

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The Credit Report You Haven’t Seen Yet, May Scare you

People who are careful about their physical health usually go in for an annual health check-up, just to make sure that everything is fine. Similarly people who take their financial health seriously should keep an eye on their credit score and report on a regular basis. Your credit report shows a complete record of all the credit accounts. Your credit score is calculated based on the information in credit report. Depending on how you manage your credit and how you handle the payments the credit score determines whether you are a worthy borrower. Checking your free CIBIL report every year helps in keeping your financial life in order. It helps in making sure that all information recorded about you is true and up to date. It helps in uncovering frauds in a timely fashion before the situation goes out of control.

Many people do not care about credit reports until they find a need for a new loan. Many people just check their report before finalizing a car loan, to see whether their credit profile is strong enough to help them bargain for better interest rates. If you are one such individual who hasn’t paid attention to your credit report till now, you may be in for a big surprise. You may find entries in your report that may give you a shock of your life.

Errors in CIBIL report are quite common these days. Such errors are capable of bringing a huge dip in credit score if not corrected on time. Identity theft cases are already on the rise. If someone is using your name to commit a fraud or if someone is charging credit card expenses in your name you may not even be aware of it until you check your credit report.

Finding out that your credit profile is in a mess at the time when you are seeking out a car loan is quite scary. To avoid such a situation one should regularly order the CIBIL report and check it for accuracy.  Check whether you recognize all the loan accounts and credit card accounts that are opened in your name. Ensure that you recognize the transactions made using credit card. If you spot any accounts in your report that you have not opened, any transactions in the billing statements that do not belong to you, or any collection notices that you do not recognize then it could be an identity theft case that may ruin the credit rating.

Immediately report such cases to the creditors who are reporting the fraudulent information and dispute these errors with the credit bureaus. You may also put a fraud alert to the credit report so that no new accounts are opened in your name. Follow up with the bureau till the item is removed from the report.

You should even get small errors like misspell name or address rectified. Such small errors, if not rectified on time, may become a reason for a bigger problem later on. If you want to protect your financial life you should take the complete onus of ensuring that your report is showing true and correct information. To get the errors fixed you can submit a dispute to the credit bureau through email. The bureau will contact the original source of information to verify the details. You may even send supporting document as proof to both the bureau and the creditor to speed up the process.

Apart from errors, even true information in the credit report might take you in for a surprise. Many a times, it is only when you see your credit report and analyse the factors that are bringing your score down do you realize your mistakes that you’ve been doing in the past.  A review of correct information like late payments helps in realizing that small mistakes can prove disastrous for the credit score.

With millions of consumer records being processed every day, errors in credit reports are bound to happen. If you want to avoid unpleasant surprises at the time you need your score to be at its best during loan approvals, monitor the report on a regular basis. It will help you uncover problems before they become difficult to manage. Order your free CIBIL report today.

Length of Credit History vs. Late Payment History, where do you stand?

All of us would have had history as a subject in school. And many of us would also have cribbed about why to learn about something that has gone past. However, the fact is that history is something that all of us have a lot to learn from. We can improve our present by reviewing our past. Goes without saying that our present is an outcome of our actions in past and studying our past does help us in taking better decisions at present.

You must be wondering how is this related to your credit profile. It indeed is. There are two important historical trends that make or break your credit score. In fact these two have the potential to either put you at a position where you are able to save lakhs of rupees or can become part of the loan defaulter list. The two important historical trends that we are referring to here are “length of credit history” and “late payment history”. Let us look at these two important aspects and how do they impact your credibility.

Length of credit history

The length of your credit history means that how long you have been holding a trade line. This is one of the most important aspect reflecting on your credit report that makes your healthier on credit front.

To explain it better, let me put you in a situation. Two known people approach you for Rs 10,000 each. One of them has been known to you for a few years now and you are aware of his history of borrowing money  few times and also about his commitment to repay as soon as the salary gets credited. The other one is a new acquaintance who has joined office about 2 months back and you do not have much awareness about his past. Who would you be comfortable in lending your hard earned money? I am sure your answer would have been the first one.

Similarly the length of credit history reflecting on your CIBIL report helps in establishing a comforting factor with the underwriter of the lending institution. A person who has enjoyed credit facilities from various banks for years v/s a person who is new to credit makes a lot of difference in the process of evaluation.

But the loans keep getting closed over a period. The fact also remains that you would want to pre-close it in case you have some funds available with you. So how to manage the length of credit history? Do not close that old credit card that you may feel has become obsolete in terms of its features. Continuing with that credit card will only help in keeping your credit scores healthy.

Late payment history

While the underwriter evaluates your loan application, the way you have managed your credit in past becomes the single most important factor that can lead to approval or rejection of the application. How have you faired against the payments would lead to impacting the outcome.

Again referring to the above example, if the first person who you had known for a few years had only paid other friends after some follow up or has had defaulted on even one friend’s loan (while paying the others in time) you would be skeptical on extending him with financial help. Just like you, even the structured lending institution would be apprehensive of giving a line of credit to an individual who has had default reflecting on the bureau report. Thus it becomes very important that all loans and credit card payments are happening in time without any delay.

Your length of credit and your repayment history are the two most important pillars of your credit profile and must be maintained. In the absence one may not have access to funding at the time of need.

Four Steps to a Healthier Credit Report

Credit scores are important as they are not only an indication of financial well being and discipline but it also a crucial factor in getting a loan application accepted or rejected. Thus it makes sense for you to be aware of what contributes to making a good or bad credit rating so that you can aim to have a healthy credit report. Here we look at a few aspects that contribute to a healthier credit score.

How to Get a Healthier Credit Score:

Five factors impact CIBIL score calculation and taking care of these factors will ensure that you have a good rating that will allow you to have access to credit if you so require.

  1. Ensure Timely Payments: This is the most crucial factor in the credit score calculation. Thus paying on time is the best way to a healthier score. So whether it’s the EMIs or credit card bills remember to always them before the due date or by the due date. This simple rule will go a long way in maintaining a good score. If you have not done this in the past it is never too late to remedy your ways. While paying on time going forward will not immediately improve the score but it will have a positive impact over a long period of time and the negative impact of late payments each month will reduce. Plus it’s a great way to get you off the loan defaulter list and better your chances of getting a loan approved.
  2. Use the Credit Cards Wisely: Credit cards come with a sanctioned credit limit; this is the maximum amount that the user can spend without paying the dues. Thus if your card has a sanctioned limit of Rs. 100,000 then this means you have access to credit up to Rs. 100,000 per billing cycle. However this does not meant that you actually need to spend an amount equal to the sanctioned limit. Actually it is good idea to keep the spending below or equal to 30%-35% of the sanctioned limit on a regular basis. A low credit utilization ration (usage/sanctioned limit) has a positive impact on the credit score and after the credit repayment history it is the most important factor when calculating the score.
  3. Eliminate Old Dues: If one is looking at getting a healthier credit report card then it is mostly a long term process. Improving the rating takes time but eliminating old dues is something that can have an immediate impact if done correctly. If you have pending dues that are reflected in your CIR then take care of them in the right way to see an improvement in the score. When you repay old dues remember to pay the entire amount and in case you do negotiate with the lender then do ensure that the lender does not report it is “settled”. A settled debt is never a good sign and would not improve the score and may have an opposite impact. Having said that paying an old debt does not mean that the delays and missed payment are removed from payment history but the debt will not show as an overdue amount in future reports which is bound to have a positive impact.
  4. Avoid Credit Enquiries: Needless to say one must apply for a loan only when one requires it! Each time one applies for a loan the prospective lender seeks the credit report of the applicant. This is known as a hard enquiry; enquiries are one of the five factors that influence the CIBIL score calculation. Even when one needs a loan and applies for it then make sure you make a thorough check about the lender’s eligibility criterion and the required documentation. This will ensure that there are no unnecessary credit enquiries and you apply to lenders only where you have a fair chance of getting the loan application accepted.

Staying credit healthy should not be something that one does once in a while and them forgets about it. Inculcating healthy credit habits and being financially disciplined ensures that one remains credit healthy throughout! Just like are financial and physical health we need to take care of our credit health too.

Reasons why errors on your CIBIL Report can be Destructive

Priya wanted to gift a new card to her parents on their anniversary. She chose the car, model and color keeping her parent’s choice and requirements in mind. She then applied for a loan, she knew it would not be difficult to get a loan as she had all the required documents and she had also maintained a good credit history. Her loan was rejected due to a low credit score and she was almost shocked as she had always been a responsible borrower. On going through her Credit Information Report she was shocked to see that there were delayed payments reported in it. She had never missed a payment and it turned out it was a reporting error by the lender.

So Priya missed a chance to gift her loved ones at the right occasion, this could have been avoided if she had been pre-emptive and had applied for a free CIBIL Score and checked if the score is acceptable to the lending agency. Despite being meticulous in her credit habits she had to face some problems.

How can errors in your CIBIL Report be Destructive?

While for Priya it was disappointment, a low CIBIL score can cause bigger problems too. It can result in financial loss, missed opportunities and a lot of wasted time and effort for no fault of yours. Being credit healthy is important and it could be doubly distressing if despite being a careful borrower your score is low due to an error in the report. While these errors can be rectified and once they are removed from your report they will enhance credit score but sometimes the delay can cause a lot of trouble and loss too. These errors could be wrong reporting of a default in payment, a loan or credit card that does not belong to you being reported under your name which will reduce your borrowing capacity and if there have been any defaults on that loan they will also be include in your score calculation.  Here are a few ways in which these errors can be destructive:

  • Cause Loan Rejection: If a lender reports that you have missed a payment or the loan is reported as settled erroneously then this could cause some serious trouble for you. Not only your credit rating will take a hit, a look at the CIR will scare away the lenders. No lender wants to lend to a person who does not pay on time or is a default risk. Thus the lender will not know that the reporting in the CIR is erroneous and they will reject your loan application without a second though whatsoever.
  • Harm your Job Prospects: This may not seem like the most obvious impact of an error in the CIR but could be more harmful then getting a loan rejected. Imagine not getting the dream job or losing out to a competitor in the final round of interviewing due to an error on your report which can cause you to appear like an untrustworthy candidate or somebody who is debt ridden. Increasing number of employers are seeking credit check of prospective employees along with a background check and a health check. This is to ensure that the employee that they hire is trustworthy and will not get into legal trouble due to unpaid dues. Thus an error could cost you dearly at a job interview.
  • Credit Card Application Rejection: An error in the CIR could also cause a new credit card application to be rejected. If your CIR show you have a high utilization ratio, missed payments or have a “settled” status account in your report even erroneously it could lead to the card company rejecting your application. While you can certainly apply for the card again after rectifying the error but sometimes the delay can cause more than expected trouble.
  • Make a loan more expensive: Errors on the CIR can lower your scores which can cause lenders to assume you to be a high risk borrower. This can make them charge you higher interest rates on loans then they would have charged otherwise. Higher the risk, higher the interest you are charged so you can end up paying more interest on a loan for no fault of yours.

The best way to avoid getting into a situation like this is to get your credit report from time to time so that you are aware of any errors in it and get sufficient time to rectify it. This will ensure that you do not suffer any losses because of these errors.

 

Is all the hype on credit score justified?

If one had applied for a loan a decade or so back, they would have required the relevant documents, knowing the bank manager or knowing somebody who knew the bank manager and could “introduce” the applicant. Knowing the manager or being introduced to the manager ensured that the lender knew about you being a reliable borrower or a trustworthy person which could not be established by simply looking at the documents. Lenders want to give money to those who can be trusted and this judgment was made in a subjective way in the past and often backfired. Things in today’s times have changed; now this “trustworthiness” or “creditworthiness” can be established in a more objective way; with the help of the credit score.

So What is a Credit Score?

Before focusing on the hype that surround the credit score and if it is justified or not we will try and understand what the credit score is. The credit score is a three digit number that reflects the creditworthiness and also the credit health of the individual. This rating is calculated based on the credit history of the individual; this history must be at least six months old and includes various aspects related to loans, credit cards and other credit behavior.

Based on five main parameters that are namely the repayment history, credit mix, credit utilization, inquiries and loan tenure the credit score is calculated. Amongst the five the repayment history is the most important parameter followed by credit utilization. These aspects are used to arrive at the credit score of the individual. The Credit Information Report which is a detailed contains a lot of information related to loans and the individual apart from the credit score.

Why is it Important?

So now we know how the score is calculated. So, why is it important? The score is important as it lets the prospective lender judge if the prospective borrower can be trusted or not. Let us start from the beginning. When an applicant applies for a loan, he/she submits an application along with the required documents. A financial institute will get hundreds of applications, they want to be sure that they lend the money to the right candidate, a person who can be trusted and is credit worthy. So how do they do this? This cannot be judged by simply look at the documents and the application form. This is what brings us to the credit rating.

The prospective lender will ask for the CIR of the applicant and based on the CIR the lender will decide whether to go on to the next step or not. The score is calculated based on the past credit behavior of an individual, thus the lender can make an assessment whether a person is likely to be a responsible borrower or not or is likely to default based on his past behavior and his current debt obligations.

Each financial institution will have its own set of rules and requirements when it comes to accepting a loan application or not. One of the criterions that the applicant has to comply with also concerns the credit rating of an individual. Thus those who have a score that is less than what is acceptable to the lender will not be sanctioned a loan, their application is likely to be rejected at the first step only. The acceptable credit score varies not only with the lender but also may differ depending on the loan type.

Generally a score of 750 is considered to be good enough to get a loan sanctioned. As per the statistics by CIBIL 79% of all loans sanctioned are to those people who have a score of 750 plus. If you are looking for a loan and have a score below this, it is a good idea to improve CIBIL score before you apply for a loan.

So is thy Hype Justified……

To clarify CIBIL or any other rating agency does not specify who should be given a loan or not, they just collect the data from various lenders and arrive at a score based on it. However, having said that almost all lenders look at an individual’s credit score before deciding whether to lend to him/her or not. Thus getting a loan or a credit card is heavily dependent on a healthy credit rating else your chances of getting a loan approved go down. Even if one were to get a loan with a low score it would be at higher interest rates. So yes the credit score is important and one must focus on keeping it healthy, not for the hype but for your own sake.

 

What you must do if there are errors on your credit report

Financial advisors always suggest that one must review the credit report periodically. The information in the credit report has a direct impact on your credit score. It determines whether you can get loans in future and how much interest you need to pay. Hence it is imperative to make sure that the data in the report is accurate, complete and up to date. A periodic check also helps guard against identity theft. You can quickly find out if someone uses your personal information to commit fraud.

How can errors crop up and what kind of errors should I look for?

Banks and financial institutions hold all the data pertaining to your credit card and loan accounts. They keep track of your payments and pass on the data to the credit bureau. If the information passed on is inaccurate then there might be errors in the credit report. Mistakes in data entry or time lag between data collection, submission and updation of details can lead to discrepancies. These can relate to your personal details for example misspelt name, wrong date of birth, PAN number etc. There may also be mistakes in the balance amount, account status or payment details. More serious errors include inclusion of credit card or loan accounts that you have not taken.

What to do if there is inaccurate information in the credit report?

However trivial or serious an error maybe, you should get it corrected to prevent any negative impact on the credit score. CIBIL has a dispute redressal mechanism through which you can report the discrepancy and get the mistakes corrected.

Fill a dispute resolution form

The first thing that you need to do is to file a dispute by submitting an online dispute form available at the CIBIL’s website. You need to furnish your personal details, the nature of the error and a brief description of the error in the online form. You are also required to fill in a control number. This is a unique 9 digit number that you can find on your CIBIL report. This number aids CIBIL in identifying the report for which CIBIL dispute is raised. Once a dispute is raised you will receive an email mentioning the dispute ID that can be used for future correspondences.

Verification of information

CIBIL contacts the concerned financial institution to verify whether the dispute is legitimate or not. Only after the credit institution gets back to CIBIL with the relevant facts and authenticates the dispute, will CIBIL go ahead and rectify the errors. CIBIL is not authorized to make any changes to the Credit report without proper verification. Only when the loan provider confirms the error CIBIL will update the records with the correct data. You will keep getting email notifications regarding the status of your request. When the dispute gets resolved you will be notified accordingly. CIBIL usually takes 30-40 days to resolve any dispute depending on the time the credit institution takes to revert back with the required information.

If the mistakes in the credit report relate to personal details or incorrect overdue amount then the resolution happens faster.  But in case you find entries of loans or credit card accounts that don’t belong to you, then it is a case of mistaken identity and it may take a little longer to resolve the issue. The law requires the bureau to come up with a formal resolution of dispute within 45 days of the dispute being raised. Once you get the resolution you can apply for the report again to see whether the changes got reflected.

In case you are not satisfied with the resolution provided you can approach the bureau again and initiate a fresh complaint. The information will be re-verified with the bank. Usually CIBIL provides a satisfactory resolution but it takes time to verify and correct the errors. So you need to be patient during the entire process.

 

CIBIL report is increasingly gaining importance. It is prudent to reflect upon it if you wish to have a smooth loan application process. You should check the report at least once every year. If you haven’t done it till now, make sure you do it at least 3-4 months before you wish to apply for any loan. In case you uncover any errors you will have sufficient time to get them rectified.

Be mindful that the errors can lead to depleting your credit score and you may be left with little options but to look for bad credit fix and apply for personal loan with low CIBIL score.

Can I Get a Loan to Repay The Debt on my Delinquent Accounts?

So, you have been falling behind with your bills for a while, and now you have a huge debt to deal with. You don’t have enough savings, and don’t want to turn to friends and family for help. You don’t know what to do now. Then one day, as you are having lunch with your colleague, they tell you about taking a personal for the repayment of debt. It sounds good to you, but you ask yourself- “Is this a really good idea?”

The situation above is more common than you think. When your back is against the wall, as debt is increasing with each passing day, you are ready to try everything possible to deal with the situation, with a personal loan being one of them. However, you must know that it has both upsides, and downsides. And it is worth being aware about them before you make the final decision.

The Upsides

1) Low Interest rate

One of the best advantages of taking a personal loan for paying off credit card debt, or any other kind of debt, is that you have to pay a lower interest rate. Personal loans generally have a lower interest rate, in comparison the interest rate on the credit cards. This means you can save a lot of money this way. Also, since many online lenders have started offering personal loans, you can get one approved easily, and quickly.

2) Easy Finance Management

Debt consolidation can make debt management a lot easier, since you just have to make one major payment every month, instead of several smaller payments. If you have more than a few credit cards, then this move can be highly beneficial for you.

3) Credit Score Improvement

Taking a personal loan can also help you build a better CIBIL score. If you make the payments on time, then it can increase your creditworthiness, and show the future lenders that you are  responsible credit user.

If the outstanding balance has increased a lot, and you are on the verge of making it to the loan defaulter list, then you can prevent so by taking a personal loan for its repayment. A loan flor low CIBIL defaulters is extremely hard to come by, which is why you should avoid defaulting at all costs.

A personal loan for debt repayment is indeed a good idea, but it has its downsides.

The Downsides

1) Continued Usage of Credit Cards

A personal loan can only help you if you minimize your credit card usage. If you have to use your credit cards even after taking a loan, then you will only add more debt, which is counter-productive. Thus, when you take a loan you should be committed to never carrying credit card balances again.

2) Higher Monthly Payments

It may not always be possible to get a personal loan that has a lower interest rate than your credit cards. In such a case taking a loan will increase your monthly payments.

Despite the potential downsides, a personal loan is generally the best way to deal with huge outstanding balance. However, if this is not an option that can work for you, or if you seek alternatives, there are a few that you can consider:

  • Credit Card Balance Conversion To EMI- The majority of banks allow their credit card users to convert their credit card loan to an EMI loan. Popular tenures for the same include 3, 6,12, 24 months. The interest rate could be anywhere between 12% to 18%.
  • Credit Card Balance Transfer: If the rate of interest on credit card balance is lower in some other bank, then you can your current outstanding balance transferred to it. In most cases you will need to pay a certain fee, but if the pending amount is a lot, then the fee will be worth the transfer.

Delaying loan payments, or credit card bill repayments can often lead of the loss of CIBIL score, and damage on CIBIL report.  The only way to improve credit score, is to choose the best way for repayment, and ensure that the payments are always made on time. The tips given above can be quite helpful in that enterprise.

 

 

 

 

Understanding the Basics of CIBIL Report

Your CIBIL report (also referred to as CIR report) is a file that contains the information about your credit history. It contains the details of the current and previous loans that have been taken by you, bank account number, account type, list of enquiries made by banks or lenders, credit limit provided to you, etc. it also contains your basic personal information.

If you want to learn how to correct CIBIL report you should understand its basics first.

Your CIBIL report contains 5 different sections apart from the CIBIL score section. These are:

1) Personal Information

In this section your personal details are provided. Here you can find your name, date of birth, and gender. Apart from that it could also contain the details of some or all of this: income tax ID number (PAN), passport number, voter ID number, driver’s license number, ration card number, and unique ID number.

2) Contact Information

The next section that you‘ll find on your CIR is the Contact Information section. It contains your phone numbers, email addresses, and residential addresses. When a bank checks a CIBIL report this sections helps identity the account holder.

3) Employment Information

The employment section carries your employment details such as your income (either monthly or annual). The mentioned income may not be your current income but the one you provided at the time of your loan application.

4) Account Information

This section is the most information section, especially for your loan lenders. It carries your credit information such as the name of your previous and current lenders, types of credit facilities available (such as credit cards, home loans, personal loans, education loans, etc.), account numbers, payment history, current balance, loan amounts, etc. Most importantly, it contains the detailed record of your last 3 years’ payment history regarding loans and EMIs. All these factors affect your credit score and are also influence your lenders when they consider you loan applications.

Here are some of the things that you should carefully look at in the Account Information section of your report before you apply for a loan or a credit card:

  • Account Details- It contains details such as your name, account number, account type (such as home loan, credit card, etc.), date of account opening and closing, and the latest date when updated information was provided to CIBIL.
  • Account Status- If there are any settlement issues pertaining to your account or if it has been written off by a lender then it would be mentioned in the report. The same goes for when you are on a loan defaulter list. Your future lenders are unlikely to approve your loan application is they will see any mention of such things in your report. For your understanding the definitions of “Settled” and “Written Off ” are given below:
    • Settled: If you report mentions an instance where an account was settled then it means you had made it to the loan defaulter list and the lender had to settle for a lower amount than the outstanding amount.
    • Written Off– When it has been more than 180 days past the due date for a pending bill or EMI then your bank writes off the amount and reports it to CIBIL.

Both the status mentioned above affect your score negatively.

5) Enquiry Information

Whenever a bank or some other institute requests for a copy of your CIR to CIBIL it accounts for an enquiry. The information of the recent enquiries of your report is mentioned in this section. If a lender notices multiple enquiries that have been made in a short period of time then they may see it as an act of desperation and decide to reject your application.

A lot of times people get a low CIBIL score because of errors in their reports.  If you too have come across any error in your report then you can get it fixed and improve your score easily. However, to make that possible you must be able to understand your report first. The information given above will be able to give you a better understanding of CIR.

 

 

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.