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People who have bad credit history or who have a lineage of defaults in their previous payments often think getting their names removed from CIBIL’s defaulter list as a one-time solution to all their problems.
However, what they are unaware of is that CIBIL, the Credit Information Bureau India Limited, does not maintain any such list of defaulters or blacklisters who have gone down in their credit ratings due to any reason known or unknown. Infact, no bank or credit bureau in India maintains any such list.
Another thing which is important to know is that CIBIL cannot even remove or change any information in its own. It can only do so if the information is received from the lender from whom you have taken any money.
So the question remains that when a person’s credit scores go so low that banks or credit institutions reject his/her loan application then what should he or she do? In such a case, before even thinking to get one’s name removed from any such (non-existent) list, one should prefer to follow the below-given regime-
1. Get your (CIR) Credit Information Report – First thing that one should do is obtain his/her Credit Information Report or simply Credit Report immediately. It can be obtained free by filing information on the below-given link – https://www.creditseva.com/check-free-credit-score-report
At times, your Credit Rating could be low due to an error in the records as well. For example, any of your KYC information could be incorrect or you might have paid fully an earlier taken loan with interest but the same might be shown as outstanding due to a reporting or administrative error.
This can also happen that a person’s rating might get affected due to some fraud. For instance, there could be an outstanding loan in your name which you have not taken. In any such suspicious case, it is advisable to reach out to the bureau and notify them of such an activity and get one’s rating corrected. This will immediately impact your CIR. Alternatively, you can also use the tools available on CreditSeva to identify the errors and get them rectified. Below-given link should help you in the same.
2. Clear off all your outstanding immediately – In case, you have any outstanding dues or unsettled loan accounts, then you should make an effort to get them to a ‘Closed’ status immediately. A ‘Settled’ or a ‘written off’ account is an immediate signal to lenders (banks, credit card companies or other financial institutions) that you have been inconsistent in paying your dues and hence are not credible enough for further loan. To save yourself from this situation, reach out to the banks and credit card agencies from where you have taken loans or cards earlier respectively and negotiate with them on the amount to get your account closed. Though this may take you around 3 months, but is a worthy effort in itself as it will start pushing your scores in the 700+ range.
3. Be diligent in paying your bills – This is one important point to be considered in order to get ones scores improved. Your loan and Credit Cards EMIs affect your credit scores directly. Infact, one third of your scores are based on the way you pay your dues. If you are timely and follow the monthly routine diligently without a skip then your credit scores also reflect the same. On the other hand, if you miss on monthly installments or pay them post the due date, they get noticed and hence tracked by the Credit analyzing agency. At times, even banks share this information with the Credit Bureaus due to several reasons. And in such a case, you turn out to be a defaulter in bank’s record then it will affect your credit scores adversely.
So, the simple mantra is, pay your dues on time and fully. Don’t skip or delay them even for a single month if you wish to see your Credit Scores rising.
4. Discipline your expenditure – While you became persistent in making your monthly payments on time, there could be yet another factor that can still pull down your ratings. This could be the expenditures that you make through your Credit Card. The more is definitely not ‘merrier’ in this case. Infact, the more costs you ‘dearer’ here.
It is advisable that you should limit your credit card expenses to 50% of its limit. For example, if you own a credit card which has a limit of 1 lakh then you should ensure not to use it for more than 50,000 Rs in any month especially while you are working to upgrade your scores. When somebody continues to spend more than 50% of his/her card’s limit, it shows a lack of spending discipline and hence an adverse effect on the Credit Rating.
5. Control your ‘Credit’ hunger – At times, when we are in a desperate need of credit, we start applying to multiple lenders for cards and loans. This is something that gets easily noticed by CIBIL as this shows that you are currently in high need of credit or in simple words currently, you are credit ‘hungry’. As this comes to fore, the lending agencies start checking your capability to pay back and in case if they are not sure of your status or doubt your profile, they simply reject your loan or credit card application.
The story doesn’t end here, a rejection on a loan or credit card application further cause your credit card scores to drift low. Hence, it is advisable that even if you need credit, be patient and thoughtful before applying to any bank or financial institution.
Once all your dues are cleared and payments aligned, it will take around 30 to 45 days to get your rating corrected by CIBIL. In case, it doesn’t happen, then you should file a complaint to your respective bank as the information of your corrected payment history need to be communicated by them to CIBIL. In some cases, the bank also do not provide relevant help, so if this is the case then one should reach out to Banking Ombudsman.
Though the entire procedure will take some time but it will still prove to be one worthy effort for lifetime and once achieved you should take it as your responsibility to be timely and persistent in your payments.
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