Firstly, one must know that there is no particular list as the CIBIL defaulter list. At present, neither any of the banking or credit rating institutions nor CIBIL issues a list for the CIBIL defaulter. In any case, if you seek a loan and your application is rejected by a banking institution, the plausible reason for the same may be your low credit score which maybe because of a bad payment record. So, one should only try to maintain the credit score by making timely repayments and building a good credit history.
Action by Banks on Loan Applications
When you file an application for a loan, the respective bank will attain a copy of your credit report from either of four credit bureaus namely Experian, CIBIL, Highmark or Equifax. This is done in order to evaluate the loan application. In case you have a low credit score or a record of delayed repayments, credit institutions will hesitate in lending you the money. They will likely disapprove your loan application considering the delayed or defaulted payment record. Banks consider the same in case of a credit card application.
Maintaining a Good Credit Score
As we have already stated above, there is no particular list released by CIBIL on the defaulters. So, the only possible way of avoiding loan disapproval is by working on your credit score, rebuilding your credit profile and maintaining a good credit score.
In order to ensure that the banks are more than willing to lend you the money, you must work on the two things as listed below.
- First and foremost, you must never delay or skip any payment. Any late payment or defaulted payment against your loan or credit card can affect your credit score adversely. When you make timely repayments of your credit card obligations or the loan, your credit profile will naturally improve for the better.
- Credit utilization is the second most important factor that influences your credit score. Credit bureaus not only take amount of debt into consideration but also consider the amount of debt utilized against your credit limits. So, it is always advisable to utilize your credit card wisely and make timely payments.
- Secondly, you must clear all the overdue payments. Further, avoid settling of accounts as it signifies that you have not been regular in your credit repayments and can lead to negative impact on your credit score. Any amount outstanding has a negative impact on your credit score. Initially, it may seem like a hassle to accumulate the money and clear your dues however it is beneficial to negotiate with your lenders and come to an amount that is in keeping with your affordability and income so as to clear your outstanding dues.
Any delay in loan repayment will lead to piling up of the interest. As a result of this, you may have to pay a much larger amount in order to get rid of your dues. Moreover, when you keep delaying the repayment, your credit score is further affected adversely. Logically speaking, there are no advantages of perennially postponing your credit card or loan repayments.
Steps for Maintaining a Good Credit Score
- The best and certainly the most effective way to keep your credit score at 750 point or higher is by ensuring that you use your credit card with due precautions.
- You must also make your payments timely as scheduled.
- Further, it is advised that you must have only credit card as per your requirement. When you hold multiple credit cards and loans under your name, it makes you look like credit hungry in the eyes of the lender.
- You must ensure that all your credit payments are done timely and in the most effective manner. This will also help improve your credit score even when it doesn’t have a good rating at present.
Always avoid applying for credit cards or loans multiple times in a row from different lending or credit institutions. All your credit enquiries and loan requests are recorded by CIBIL which may hamper your credit score in the long run.