December 12, 2024 · 15 mins read
Santosh Kumar
CIBIL or TransUnion CIBIL is one of India's four Credit Information Companies (CICs). Its full form is Credit Information Bureau India (Limited), perhaps the most prominent and well-known of the four India credit bureaus. The other three are Equifax, Experian and CRIF Highmark. CIBIL is the oldest among them and perhaps that is why the most trusted one too.
As the name itself tells, the credit information companies are entrusted with the task of collecting and recording all credit related data and information of each individual. This includes all their details about loans, credit cards, etc. For instance, the credit bureaus reach out to banks, credit card providers, other lenders and financial institutions to procure data such as an individual's repayment history, the number of credit enquiries they have made in the past, the number of loan rejections and approvals, the ratio of secured to unsecured credit, any loan settlements, any default or pending payments, etc.
Now, you might be wondering what these credit bureaus do with such information. The credit bureaus use each individual's data to create a credit report and generate a credit score for them. Let us understand both these terms better and in more detail.
The credit bureaus assess each individual's credit behaviour, and based on this assessment, a detailed report of how they have handled available credit in the past is created. The credit report is used by banks and other lenders when people apply for loans, credit cards, mortgages, etc. Looking at their past credit handling gives banks an idea of the amount of risk they would be taking by granting a loan, credit card, etc, to a particular applicant. This is why it is crucial that you maintain a good credit record so that prospective lenders can trust you and see you as creditworthy. For instance, if a lender sees that you have defaulted on a loan in the past, how can they trust you to repay their money in case they sanction a loan to you?
One of the most important elements of the credit report is the credit score. Based on all the aforementioned factors, each person is assigned a credit score by each of the credit bureaus. This score will always fall between the numbers 300 and 900. A score lower than 700 is considered poor and insufficient by most banks in order to approve a credit application since it reflects irresponsible credit handling on the applicant's part. A score above 700 suggests that the applicant is a responsible borrower, and the lenders are unlikely to incur a loss if they give money to him.
Having a good credit score and a healthy credit report is essential if you wish to get any form of credit, and that too on favourable terms and conditions.
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Now that you know how important it is to have a good CIBIL report and credit score, you must make any improvements that might be needed in your report and score. One of the best ways to do this is to remove bank accounts from CIBIL.
Let us discuss the type of loan accounts that might be seen on your CIBIL report and how you can remove them:
1. If you have taken an active or ongoing loan, you are still in the process of repaying it, and there are installments left to repay.
2. To remove active loan accounts from your CIBIL, you need to repay the loan completely. Repaying all your active loans as soon as possible is always a great idea because it reduces the number of loan accounts in your CIBIL report and also shows you as a financially stable borrower who can be trusted with credit.
3. Once you have paid off the loan, make sure you get an NOC from your lender for confirmation and request them to update it with CIBIL (although most lenders do it on their own).
4. This should remove the loan account from your CIBIL. If it is still flashed as an active loan in your records, raise a dispute with CIBIL on their website, and it should be resolved within 30 days.
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1. A loan settlement occurs between a lender and a borrower when the latter is unable to pay off the amount he initially agreed upon. In such a case, another lower amount is decided by both the lender and the borrower that can be paid, and the loan will be settled. Settlements reflect poorly on your credit report.
2. To remove a settled loan account, you must pay the outstanding balance to your lender and get an NOC from them.
3. Once CIBIL receives this information from you or your lender, it will update the status of your loan account from 'settled' to 'closed', thus removing it from CIBIL.
1. A loan will be labelled as 'written-off' on your CIBIL report if it has been more than 90 days since your payment has been overdue and the lender has given up on receiving payment from you. The lender removes it from their balance sheet.
2. A loan being written off impacts the borrower's credit score negatively and should be avoided at all costs.
3. If you have a loan written off and want to remove it from your CIBIL profile, you must repay the entire amount as soon as possible.
4. Once done, get a No Dues Certificate from the lender confirming the loan repayment. Your written-off status should be removed from your CIBIL report within a few days. If the loan account is still labelled as written off, you can file a dispute on the CIBIL website to resolve the issue.
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1. When you make a loan enquiry it also gets reflected on your CIBIL report and impacts your CIBIL score. A loan enquiry is when you apply with a lender to get a loan. It is called a hard enquiry or a hard pull.
2. In case you check your CIBIL score, generally, it won't be counted as a hard enquiry.
3. You cannot remove a loan enquiry from your CIBIL report. It will be removed by itself after 2 years.
1. If you have been unable to repay a loan, the lender can take legal action against you. This is called filing a suit against you and reflects very poorly on your CIBIL report.
2. To remove such a loan account from your CIBIL, you first need to pay back the lender the entire amount owed, including any late payment charges.
3. Try avoiding making a loan settlement to get rid of the suit. As you already know, it has negative impacts on your CIBIL report and score.
4. Your loan account will be shown as closed once you have made the full payment and obtained an NOC.
5. If it is not updated after the recommended waiting period, make sure to file a dispute with CIBIL and resolve the issue as soon as possible.
These are all the different kinds of loan accounts in your CIBIL report and the various ways in which you can remove them. Sometimes you might see 'written-off', 'settled, or even loan suits despite any mistake or payment delays from your side. This can happen due to a mistake made by the lender or an error on the part of CIBIL itself. In such a case, make sure you reach out to CIBIL as soon as possible and resolve the issue to avoid any future inconvenience. You can file a dispute on their official website, www.cibil.com.
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Maintaining the accuracy of information on your credit report is important to be able to determine the status of your financial well-being and thus to maintain your overall financial health. A credit report is a record of your histroy of borrowing money, repayment of that money, on whether any money has been borrowed (how much), and on how many times you have enquired about borrowing in the past.
You'll need to first register for an account on the official TransUnion CIBIL website to be checked. To make an account you'll need to enter your name and PAN number, date of birth, and contact number. Once your information is verified, you can view your CIBIL score and credit report. Individual consumer are entitled to one free credit report every year; any additional requests will require the purchase of a subscription.
You may also obtain a copy of your credit report on the website of authorized financial institution, the bank, or any digital financial institution that offers monitoring services for historic credit-related transactions. Keep in mind that after you obtain a copy of your credit report, carefully review the contents for possible errors. Items such as personal details (name, address, PAN number, etc.), loan accounts, cash payments, history, and inquiries in your credit file may exist that are not correct. If you suspect an inaccuracy on your copy of credit report, file a dispute with the credit reporting organization (CIBIL) to have it corrected.
Monitoring your credit file on a regular basis will provide a better level of transparency in your financial status and to allow you to take action to strive to improve your credit file.
Your credit score impacts the ability to borrow money. If you have an excellent credit score, lenders will offer loans and credit cards at lower interest rates. To boost CIBIL rating, you must manage your finances consistently and responsibly.
One of the best ways to establish creditworthiness is by making timely payments on loan EMIs and credit card bills. Payment history accounts for 1/3 of your overall score, so only 1 missed payment will affect your score negatively. If you set up a reminder or allow auto-debit from your bank account, you can ensure timely payment.
A big part of your financial picture is your credit utilisation ratio. You should use no more than 30% of your available credit limit because using more than this number indicates financial difficulty which affects your credit score negatively.
Another thing borrowers should do is avoid applying for multiple loans or credit cards in a short time frame. Multiple applications require multiple hard inquiries, which will reduce your credit score.
Another way to improve your credit profile is by keeping older credit accounts active and having a good blend of secured and unsecured credit. Additionally, frequently reviewing your credit report to identify errors and resolving discrepancies quickly will help build a good credit rating.
It takes time to improve your credit score, but with consistent repayments and responsible credit behaviour, you will gradually build good financial credibility.
If a lender, or financial institution is conducting a check on your credit history, they are doing a hard inquiry and looking at your credit file as part of their assessment for an application for either a Credit Card or Loan. A hard inquiry will be recorded on your credit file and can have an adverse effect on your credit score.
If a number of hard inquiries are made close together, lenders may assume the lender is looking for intra-borrowers due to an existing amount of financial strain. Thus, this will likely cause a minor reduction in your credit score. For just one hard inquiry, your credit score may be affected slightly, however, with many hard inquiries, your credit score may decrease by a significant amount.
A hard inquiry will remain on your credit file for a set period of time, therefore for future lenders to assess your creditworthiness will still take into consideration hard inquiries from your credit file when making their decision. Therefore, you should try to limit doing credit applications only when necessary and only after you have assessed that you meet the eligibility requirements for that credit.
When a hard credit inquiry is made, it can lower your credit rating, because to the lender that means that you are a higher risk for lending, since you're looking for additional credits, which indicates that you may have an increase in your financial obligations, and your ability to repay these new debts may not be as secure.
If you are making frequent applications for credit in any form (including loans and credit cards), this could also raise a flag with lenders that you are relying on borrowed funds/that you will have an increasing amount of debt, and that you may not be able to pay back what you owe. This may cause your credit score to decrease slightly.
If there are multiple lenders that have done a hard inquiry into your credit, in a short period of time, this could lead them to suspect financial instability or that you have an urgent need for additional credit. This will have a negative influence on your overall creditworthiness and will impact your credit score by a slight decrease.
The overall impact of a hard inquiry on your credit score is relatively short-lived. Therefore, if you maintain a positive repayment history, limit your number of new credit applications, and manage your current credit properly, you will see your credit score go back up and continue to improve over time.
Your CIBIL report contains all information about your credit behaviour. This also includes each and every detail about your loans. They include all sorts of loan accounts - loan accounts that are active and ongoing, loan accounts that the lender has written off, loan accounts that have been settled, loan accounts that have a suit filed because of late payment and even the number of loan applications a person has made. Except for the last one, all of these loan accounts can be removed from your CIBIL report. Loan enquiries stay on your CIBIL report for a period of 2 years and are then removed by CIBIL itself. You cannot do anything to remove them.
The first thing you are required to do in each case is to repay everything that you owe the lender. This includes the principal loan amount, the interest accumulated, and any charges that might have been levied due to late and delayed payments. Once done, you must get an NOC from your lender and inform CIBIL about the same. The lenders also inform the credit bureaus themselves, and your loan account shall be closed within a few days.
If your loan accounts are not closed and removed even after following the given steps, or if accounts exist because of a lender's or CIBIL's error, you can always visit their official website—www.cibil.com—and file a dispute. The issue should be resolved within 30 days.
1. What does the write-off mean on my CIBIL report?
If a loan account is seen as written off on your CIBIL report, it means that you have not been able to repay for more than 90 days, and the lender has removed your loan account from his balance sheets. In other words, they have given up on getting a repayment from you. Written-off status affects your credit report poorly and lowers your credit score. If you have it on your CIBIL report, you must make efforts to remove it.
2. Will a loan settlement impact my CIBIL score?
Yes, a loan settlement will impact your CIBIL score, and the impact will be negative. It means that it will take your CIBIL score lower. A loan settlement shows that the borrower is incapable of repaying his dues, which further impacts your loan and credit applications.
3. Can I remove a loan enquiry from my CIBIL report?
No, you cannot remove a loan enquiry from a CIBIL report. A hard enquiry will remain on your account for two years and then be removed.
4. How much CIBIL score is needed for a loan?
There is no fixed CIBIL score that all lenders need to provide a loan to an applicant. However, most see 700 or above as a good enough score and readily provide a loan to a borrower with such a score. With a score lower than 700, it might be difficult for an applicant to get a loan application approved, and even if they get the loan sanctioned, they will not be able to enjoy favourable terms and conditions.
5. My loan account is labelled 'settled' in my CIBIL report even though I have not settled it. What should I do?
If you have not made a loan settlement but your CIBIL report is showing a 'settled' status, this can happen because of a mistake made by your lender or an error made by CIBIL itself. It is crucial that you get this status removed as soon as possible. In such a case, you should visit the official CIBIL website, www.cibil.com, and raise a dispute about the problem. Usually, the issue gets resolved within 30 days. After that, the settled status will be removed from your account.
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