Your credit score is one of the few variables that reflect your creditworthiness, whether you apply for any loan or a credit card. It is a significant parameter by which the repayment ability is measured by a creditor. It is important that you never come across as a ‘CIBIL defaulter’ as your credit score plays an essential role in getting you a loan.
It is most likely because of your lower credit rating if you have been rejected for a loan or credit card. If you’re wondering if you’ve been placed into the ‘CIBIL’s Defaulters List’ by your low credit score, then here’s the thing-CIBIL (Credit Information Bureau India) doesn’t hold a list of defaulters. In fact, no credit bureaus do so.
The primary function of CIBIL is to collect and maintain payment records of a person relating to loans and credit cards. Each month, the Member Credit Institutions, which include various financial institutions, such as private banks and other lenders, publish these payment records. The loan approval of a person depends on the credit policy of a credit institution, such as banks. When you apply for a loan, to detect possible inconsistencies that might be present against your name, these financial institutions review your credit score and credit history.
So you need to maintain a healthy credit score if you want to save yourself from being labeled as a ‘Defaulter’. The following are some of the key points to note when removing your name from the CIBIL default list to help you with the same thing:
- Review Your Credit Report: Examine your credit report carefully, this will help you understand the inconsistencies if any are present and will also ensure that the details are right in the report.
- Clear Off Your Outstanding Dues: To pay off all your unpaid dues on time to clear your dues, you can talk to your creditor and chalk the way out, the easiest way to boost your credit rating. Wait for 3 months after your dues are cleared off and review your credit report again to check whether the same has been revised or not.
- Do Not Exceed Your Credit Limit: Try to spend no more than 30% of your limit on credit. This will keep your credit score stable at all times.
- Do Not Apply for Multiple Loans and Credit Cards at One Time: If, within a short time, you apply for several loans and credit cards, it means you are hungry for credit. Lenders are doubtful about your repayment capacity and can deny your request for credit. Each rejection reduces your credit score further. You can, therefore, only apply for one loan or credit card at a time. This makes payments simple and offers a better chance of getting your credit application accepted.
WHAT CAN BE DONE TO NOT BE ON THE DEFAULTER’S LIST?
In order not to be on the CIBIL defaulter list, the following things should be done:
- The Control Number (CN) is the details you need concerning the list of CIBIL defaulters. A CN will be produced any time a financial institution asks for your CIBIL report. A CN is a nine-digit number that allows quick access and traceability to your credit report.
- You must find your Credit Information Report (CIR) if you want to boost your credit score or erase your name from the list. This will allow you to verify any advance/credit you may have defaulted on. You should take action from there to rectify the situation so that you can delete your name from the list of defaulters.
- You should do one thing instantly to stop getting several credit cards. Too many credit cards would mean that the need for credit is high, which makes the risk of defaults very high.
- You also need to verify if the unpaid loan sum and Days Past Dues (DPDs) represent the true story in your CIBIL report.
- Last but not least, make all payments outstanding on-time linked to your loan. Forget what you have done in the past and start making payments on time for equal monthly installments (EMIs). This will raise your credit score, even though it is not in very good shape at the moment.
These are the ways you can delete your name from the default list of CIBIL and improve your chances of credit acceptance.