One of the important documents in your financial portfolio would be your ‘Credit Report’. A Credit Report provides detailed information about your past financial behavior. It also lists in detail the number of loans that you had in your past. In case your credit report includes the term “Written Off,” lenders might feel hesitant in granting credit.
Let us understand why the term “Written Off” is among the major reasons for loan application rejections. This article provides detailed information about how the term “Written off” affects your credit score and credit report.
What Does “Written Off” Mean in a Credit Report?
"Written Off" is a technical term used in credit reporting when a lender decides that a borrowed amount is unlikely to be recovered and updates the account's status.
A Written Off status on your credit report indicates that you have taken a credit in the past and failed to repay it. This is an indication of bad credit handling.
You take credit from the lender, promising him to repay the debt. Unfortunately, if you do not have the funds to repay the loan, you will default. Your credit account remains on the lender’s defaulters list.
Most lenders set a specific time frame for loan repayment. The typical waiting period is 180 days. Even beyond the specific time frame, if you fail to repay the loan, then the lender will include your name in the list of “Loan Defaulters”. They will send a report to the credit bureau stating that you have defaulted on your credit, and the phrase “Written Off” needs to be listed against the stated credit account.
When a personal loan is written off by the lender, it does not mean the debt is cancelled; rather, the lender has moved it from a “Loan Active” status to a “Loan Written Off” status for accounting purposes.
How “Written Off” Status Affects Your Credit Score
A “Good Credit Score” is an indicator of financial well-being. It indicates the discipline and responsibility you have displayed with regard to your finances. On the contrary, a ”Written Off” status merely indicates that you failed to keep up with repaying your debt. This will result in:
- Credit Score drop
- Future loan application rejections
- Higher interest rates and stricter terms and conditions.
- Remaining visible in your credit report for a long period.
How to Check if Your Credit Report Shows “Written Off”
If you default on a loan payment for more than 180 days, the lender will mark your credit account as “Written Off” on your credit report.
- Visit the website of any of the Credit Bureaus.
- View your “Credit Report” on the credit bureau's website.
- A section by the name “Account Information” appears on the credit report.
- See if your “Credit Report” status shows “Written Off.”
- Note the account number and lender's name to help rectify it.
How to Remove the ‘Written Off’ Status from a Credit Report?
The following steps must be taken to remove the “Written Off” status from a credit report.
Step 1: Check for Accuracy on Your Credit Report
Go to a specific credit bureau and check your credit report. Check whether your credit report matches the list of accounts. Go to the specific credit account and note your loan amount, default date, and repayment history.
Step 2: Contact the Lender for Correction
The next step is to check with the lender. Arbitrate with him to resolve the issue. If the issue is due to any genuine reason, request a settlement or repayment structure to repay the loan and to save you from the “Written Off” status.
Step 3: Request Lender to Send Update to Credit Bureau
Once you have started your settlement or repayment plan, request that the lender send an update to the credit bureau for the specific credit account.
Step 4: Check with the Credit Bureau if the update is Not Reflected
Wait a month for an update on the credit report. If the update is not reflected, raise a dispute with the credit bureau, as your credit report is not reflecting the status.
Step 5: Follow Up Till the Update is Reflected
Check with the credit bureau regularly until the update shows on your account.
Tips to Improve Credit Score After a Written-Off Account
Generally, people perceive that once the written-off status is removed from the credit report, their credit score will automatically improve. But it is a myth; you need to adopt good credit habits and strategies to improve your credit score after being written off.
- Pay your EMIs and bill payments on time.
- Lowering your DTI ratio shows lenders that you are stable.
- Apply for credit only when you require it the most.
- Check your credit report once every few months for errors.
- Keep your credit card utilization low.
- Take a secured loan to help improve your credit score.
Note: Financial advisors like CreditMantri can help you remove the “Written Off” status and guide you to a good credit score.
How Long Does Written Off Status Stay in a Credit Report?
The following pointers are determinants of the “Written Off” status on your Credit Report.
- A “Written Off” status remains in your credit report for more than seven years.
- This 7-year period does not start from the date you made the default payment, but from the date the lender reports it as a “Written Off” account to the credit bureaus.
- The entry will be visible to anyone who checks your credit report during the 7-year period.
- Even after the 7-year haul, you can see the effects of the default on your credit report. Historical data can be accessed by lenders and influence their decisions.
- The direct, severe impact on your credit score will diminish over time.
Conclusion
Understanding the consequences of a “Written Off” account is the first step towards credit recovery. This serious remark remains on your credit report for a longer period of time. This Written Off remark will also affect the lender’s future credit decisions. But there is always a way out to get the “Written Off” remark removed from your credit report. We have listed the best possible ways to remove it and build a path towards good credit recovery.
Frequently Asked Questions
1. How to remove Written Off status on your credit report?
The Written Off status can be removed from your credit report by paying the loan default amount in full to the lender and requesting the lender to send the updated status to the credit bureaus.
2. Is it possible to get the Written Off status removed?
Yes. It is very possible to have the Written Off status removed by requesting that the credit bureaus update the credit report.
3. What is the difference between Written Off and Settlement?
Written Off status is the amount that remains due to the lender. On the contrary, a settlement is an arbitration that you entered into with the lender to pay only a reduced amount to close the debt.
4. Is it possible to build my credit after a Written Off status?
Yes. You can build your credit after the Written Off status with proper credit habits over time.
5. Is it advisable to seek professional help to remove the “Written Off” status?
Yes. A financial advisor like CreditMantri can help you get the Written Off status removed from your credit report.
Disclaimer: This page includes information that has been compiled from many sources and is only offered for informational purposes. Given that this type of data may change over time, we cannot guarantee the accuracy of the information supplied or included within it. It is anticipated that the user will confirm with the relevant source before making any choices or taking any actions.