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One common worry that runs through your mind after you have made a credit card settlement is, “Do I have any way to repair my CIBIL™ score after the settlement process?” Yes, there is! It is never too late or too difficult to turn around your credit situation. However, you need to remember that there is no instant, overnight quick fix to improve your credit score. Just like any diet or health/exercise plan, you need commitment, discipline and patience to achieve your goal.

Do remember CIBIL™ is one of the four authorized credit bureaus in India which provide a credit score, the others being Equifax, Experian and CRIF High Mark.

Below are some tips on how you can do this.

1. Convert ‘Settled’ to ‘Closed’ status: If you have settled with the credit card company, it would be advisable to pay off your bill in full and change your status from ‘Settled’ to ‘Closed.’ A ‘Settled’ status still has a negative effect on your credit score as it shows you have not paid off your dues in full. Talk to your credit card company and agree on a mutually acceptable amount – based on your income and affordability – that will allow you to convert it to a ‘Closed’ account. This will have a significant positive impact on your credit score.

2. Make regular payments: Your repayment record is a very important factor in calculating your credit score and makes up almost one-third of it. One of the most effective ways you can rebuild your score is to make all your loan/credit card payments in time and in full, starting right away. This will have an immediate and significant impact on your score. You might have to restrict your spending in order to be able to make full payments, but the positive impact on your score will be well worth it.

3. Pay off your any outstanding: Any outstanding on your loan or credit card is a big drag on your credit score. Though it might initially seem difficult to find the money to pay them all off, it is a good idea to negotiate with each of your lenders to try and arrive at an amount to pay off all your dues. The longer you wait, the more interest continues to pile up and you will end up having to pay a much larger amount to clear your dues. Simultaneously, even as you postpone payment, your credit score continuously decreases. In fact, there is no advantage in putting off repayments on your loan/credit card outstanding – only disadvantages. Paying it off will be a huge step in improving your score and loan-eligibility.

4. Do not exceed 50% of your credit limit: Another factor that contributes to your credit score is the amount of money that you have available on your credit accounts. Make sure that you do not use more than 50% of the credit limit offered to you. For example, if you have a credit limit of Rs. 50,000 on your card, do not spend more than Rs. 25,000 a month on the card. Anything more reflects a lack of spending discipline and that you are ‘hungry’ for credit. This has a negative impact on your score. To improve your score, make sure that you limit yourself to 50% of your limit.

5. Continue to use credit: Many people get burned by their credit and stop using their credit cards in an effort to improve their credit profile. This is not a good idea. Bear in mind that you have to use your credit in order to rebuild your credit score. Your credit score will improve only if you demonstrate responsible credit behaviour. Lack of any credit activity will only lead to a decrease in your score! So another way to improve your credit score is to use a small amount of the credit limit offered to you, and pay off your balance in full every single month.

It would be good if you set a target credit score of 750 which is generally the minimum score banks view as being credit-worthy. It can take between 4-12 months to reach this number based on your individual credit situation, and the reward is a future of quick and easy access to credit.


1. What is credit card settlement and what is its impact on the CIBIL™ score?

Credit card bill settlement is the process wherein the bank asks a person to pay an overdue settlement instead of his dues if he is not able to pay his dues. The bank will thereafter discontinue the credit card. Although the person is free of the dues, it hurts your CIBIL™ score.

2. How can I improve my CIBIL™ score after credit card settlement?

  • Change your “Settled” status to “Closed” with your credit card company. When the status is closed, then it indicates that you have paid your dues entirely whereas a settled status indicates that you are yet to pay your dues completely. If you are not able to pay your dues all at once, then you can talk to your bank or credit card company and come to an agreement about an amount that is equally desirable by your bank or credit company and which is within your repaying capability as well. When you change the status of your credit card settlement to closed, then it will have a positive impact on your CIBIL™ score.
  • Exhaust only 30% of your credit limit: Using up only 30% of the credit limit improves your CIBIL™ score and makes it high. Those who exhaust their entire credit card limit will see a fall in their CIBIL™ score.
  • Pay balances and dues in full from the start
  • To improve your CIBIL™ score, you can apply for a credit card against any fixed deposit account. You need not have a huge amount saved in your FD account and it can be as low as 25,000. The credit card company will issue a credit card with 90% of your FD account as the credit card limit. Use this card regularly and exhaust only 30 to 40% of your credit card limit.
  • Pay all your outstanding balances- If you have any outstanding balances against your credit card or loans, then take steps to pay them. Having outstanding balances against your loan and credit card will surely deteriorate your CIBIL™ score.
  • Go for secured loans - secured loans are those that are taken to acquire stable assets, such as a home. They have a positive impact on your CIBIL™ score. Unsecured loans are those that are taken to acquire depreciating assets, such as holiday loans, credit card debts etc. They have a negative impact on your CIBIL™ score. A mix of 80% secured and 20% unsecured loans is healthy and will help in improving your CIBIL™ score.
  • Don’t be without using credit in your rebuilding period: Even if you have just had a credit card settlement, use your credit card within 30% of your credit card limit in the rebuilding period. Open a new credit card account with a low balance and pay off your dues and bills correctly.
  • Don’t forget to take an NOC from the bank or credit card provider when you are closing your credit card. Having an NOC indicates that you are using your card responsibly.

3. What are the advantages of a high and improved CIBIL™ score?

The advantages of an improved or high CIBIL™ score are:
  • Easy and quick approval of loans
  • Approval for a high loan amount
  • Low home and car loan interest.


The 4 credit bureaus- CIBIL™, Equifax, Experian, and CRIF highmark offer credit scores in India. The points mentioned above are true for credit scores from any bureau, not just CIBIL™.

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