Whether you’re applying for a home loan, car loan, or personal loan, your credit score is one of the few factors that make you credit worthy. It is an important parameter on which a lender evaluates your loan repayment ability. Since your credit score plays an essential role in getting you a loan, it is important that you never come across as a CIBIL defaulter.
If you have been rejected for a loan or credit card, it is most likely due to your low credit score. If you’re wondering whether your low credit score has put you in the ‘CIBIL Defaulters List’ then here’s the thing – CIBIL (Credit Information Bureau India) does not maintain a defaulters list. In fact, there is no defaulters list that is maintained by either CIBIL or any other similar credit bureaus.
CIBIL’s primary role is to gather and preserve an individual’s payment records related to loans and credit cards. Every month, these payment records are reported by the Member Credit Institutions, which includes various financial institutions such as private banks and other lenders. An individual’s loan approval depends on the credit policy of a credit institution such as banks. When you apply for a loan, these credit institutions check your credit score and credit history to identify possible discrepancies that may be present against your name. You can purchase your CIBIL score and credit information report online but you won’t get a CIBIL defaulters list as CIBIL neither has nor maintains a defaulter’s list. However, there are loan defaulters who are rejected loan or credit card requests due to their poor record of repayments. If you want to save yourself from being labelled as a ‘Defaulter’, you need to improve your credit score. To help you with the same, the following are some of the important points to remember:
1. Examine Your Credit Report
You can improve a situation or solve a problem only when you understand it. Similarly, you can improve your credit score only after you understand what went wrong and where you went wrong. The result of your bad credit report may not always be you. It can also be due to a human error. Therefore, careful examination of your credit history, besides analysing your flaws, also helps in ensuring that your details in the report are correct. If you find an error in the report, you may contact CIBIL through their website contact details.
2. Clear Off Your Dues
Delayed loan repayment is one of the major reasons behind poor credit scores. A “Settled” or “Written Off” status on a credit report warns off lenders as it shows that the borrower cannot be trusted to fulfil their debt obligations. Therefore, loans for CIBIL defaulters are mostly rejected by the lenders. To improve your credit report, clear off your all outstanding dues as soon as possible. If you have financial constraints, talk with your lenders to find a feasible way out to the situation. Once all your outstanding bills are cleared, check your credit report after three months or so to ensure the new status reflects in your credit report.
3. Pay Your Bills in Time
When you take a loan, you are required to repay a certain amount to the lender each month. Don’t be in an illusion that a single skip, delay, or partial payment will not affect your credit score as every single transaction of your payment is recorded and reported to the credit bureau. Missing or delaying even a single loan instalment negatively impacts your credit history and credit score. If you want to improve your credit score or keep the good score steady, start paying your monthly loan payments and credit card bills before the due date. The timely you pay your instalments; the higher will be your credit score.
4. Spend as Per Your Credit Limit
When repairing your credit score, pay down all credit accounts where you have balance more than 25 percent of its credit limit. CIBIL defaulters who use credit cards often to make payments, keep a check on the amount you spend using it. Ensure that you do not spend more than 50 percent of your credit limit as it shows lack of discipline and raises a suspicion on your financial ability to pay off your bills, hence, negatively impacting your credit score. Therefore, you must refrain from spending too much using your credit card.
5. Take Loans One at a Time
Never apply for multiple loans at the same time as it shows that you are in desperate need for money. In addition, one should not apply for loans even in short duration as even this behaviour of the borrower raises a suspicion on your creditworthiness. Therefore, the borrowers should apply for a loan one at a time. Doing so not only increases your chances of getting your loan approved but also makes the payments easy to manage.
Frequently Asked Questions
Q.How many years will CIBIL keep a record of defaulters?
If you are a defaulter, your credit report may contain data from the past 7 to 10 years with CIBIL.