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The credit score is the credit rating of an individual issued by an authorised credit bureau. In India, credit scores are generated by the four major credit bureaus:

  • CIBIL™
  • Equifax
  • Experian
  • CRIF High Mark 

These credit-rating agencies collate the data from various lenders to form the credit score of a person.

A person having a good credit score can get access to loans at relatively cheaper rates of interest. Also, the amount of loan that can be sanctioned to a person with a good credit score is higher as compared to a person having a low credit score. The first point of reference for any loan application or credit card application is the credit score of the applicant.

What is the Defaulters List?

CIBIL™ does not maintain any official defaulter list which keeps a record of the persons who have defaulted in any way. Similarly, other credit rating agencies also do not have any defaulter’s list. Hence there is no question of removing someone’s name from such a list.

CIBIL™ allows a person to check their credit score for free or at periodic intervals for a paid subscription. Lenders always confirm the credit score of a person before sanctioning a loan to them. The rates of interest on loan products are also heavily influenced by the credit score of a person. Therefore, it is essential to avoid being categorized as a defaulter, which can lower your credit score.

How to improve my credit score?

There are many ways that a person can improve their credit score. These are simple measures that can be adapted to gradually improve the credit score of a person which will help them in being considered as a low-risk candidate and get better loan products at a relatively cheaper rate, higher tenure or higher quantum of loan.

Some such measures are mentioned below.

Paying overdue EMIs or credit card dues

The first and foremost step in improving one’s credit score is the payment of all existing overdue liabilities. These liabilities may include overdue loan instalments or credit card dues. Lenders will look at all the existing liabilities to determine the eligibility for any loan or credit card. This is due to the fact that the credit score of any person is reduced if such a person has consistently defaulted in paying loan instalments or credit card dues.

Timely payment of monthly liabilities

After paying off the previous or overdue liabilities, the next step to improve the credit score is by regularly paying the loan instalments and the credit card dues as and when they are payable. This will assure the lenders of the repayment capacity of a person and improve the creditworthiness of such a person.

Keeping the credit utilization in check

The credit utilization ratio is the amount of credit utilized by a person against the total available credit for any person. An ideal credit utilization ratio for an optimum credit score is 30% approximately. The credit utilization ratio of a person has to be kept in check to improve the credit score of such persons.

Avoid multiple loan enquiries or credit card applications at the same time

It is not considered ideal to have multiple loan applications at the same time. This will reflect poorly on the person as it shows the dire need for finance for such a person. It is therefore advisable to opt for loans gradually, preferably after paying off the existing one and then applying for a new loan.

Timely payment of utility bills

Another important yet simple measure to improve the credit score of a person is by paying the utility bills on time. When the utility payments are delayed consistently, this implies that the person has very minimum credit and is indirectly a high-risk candidate for any kind of loan or credit cards.

FAQs

1. How many years will CIBIL™ keep a record of defaulters?

A. CIBIL™ keeps the record of all the credit-related information of a person in the credit information report for a period of 7 years.

2. How can I remove written off status in the CIBIL™ report?

A. A person will have to clear their existing dues completely to remove the ‘write off’ status in the CIBIL™ report. If a borrower is not able to pay off the entire dues, they can pay the settlement dues which are agreed between the lender and such person. After paying off these dues, the borrower has to request a NOC (no objection certificate) from the lender which can then be submitted to CIBIL™ for record-keeping and removing the ‘write off’ status of such person.

3. How to remove settled status from CIBIL™?

A. A settled status implies that the person has not paid his/her dues in full but has paid an amount that has been mutually agreed between the lender and such person which is less than the total amount due. This amount is based on the income and the repayment capacity of the person. Having a settled status on the CIBIL™ report can still harm your credit score. To get a settled status removed from your credit report, get in touch with your lender and request them to convert the settled to closed status. Note that the lender may or may not grant your request, depending on other factors like your timely repayments, relationship with the lender, etc.

4. Can a person do CIBIL™ corrections online?

A. A person can request online dispute resolution through the online mode but cannot make any changes to the credit report directly. The lender has to authorize the agency to make any changes requested by the person.

5. How to clear a CIBIL™ problem?

A. A person can clear the CIBIL™ problems by clearing their credit card dues, keeping the credit utilization ratio in check, removing any errors in the credit report, etc.

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