How to Deal with a Written off or Settled Credit Card Account in Your Credit Report?

15 Dec 2020 // 24 min read // Credit Cards
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If you have an existing Credit Card or planning to Apply for a New Credit Card, you must know how to read a credit report. There are four different statuses of accounts.

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  • Open Accounts:

    These accounts are live in the system. The report will also show the outstanding balance in the account.

  • Closed Accounts: 

    You have closed these accounts in the ordinary The banks report the transaction to the credit bureaus accordingly. You will find the remark ‘Closed’ along with the date of closure of the account.

  • Settled Accounts:

    These accounts are also closed, but not in the ordinary You have negotiated with the bank for a settlement, and the bank has agreed to it. Such accounts have the remarks ‘Settled’ against their name.

  • Written off Accounts:

    The bank has tried to recover these accounts from you. On failing to do so, they have written it off from their books. However, you still owe these amounts to the banks. Such accounts reflect as ‘Written Off’ accounts in the credit report.

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How Long Do These Accounts Remain on the Credit Report?

In the ordinary course, these accounts remain for seven to ten years. The written-off accounts can remain for more extended periods as well. The settled and written off accounts are a blot on your credit history. It is better to deal with them appropriately and improve your credit score.

How Do You Deal with Settled Accounts and Written off Accounts?

You cannot do much about the settled accounts as you have already adjusted the accounts with the banks. The written-off accounts have a more significant impact on your credit score as compared to the settled accounts.

In case of written off accounts, you can take the following steps to set them right:

  • Check your credit report to ensure that the accounts pertain to you. There are cases of mistaken identity. Errors can also creep into the report. You might have closed the account, but the credit bureau might not have updated the same. Dispute such cases and rectify the same.
  • In case the accounts belong to you, check up with the Credit Card issuing bank about the amount you have to pay to close the account.
  • The banks calculate interest at the contracted rate and come up with a figure. Naturally, the amount would be an exorbitant one as the interest rates on the Credit Cards are in the range of 35% to 42% per annum.
  • It is advisable to settle the account through a compromise deal. The banks have already written off the amount from their books. Hence, they would be ready for a significant Your bargaining skills come to the fore during such moments.
  • Usually, the banks accept any amount equal to or more than the written off amount. Pay the same and obtain the No Dues certificate. Remember, these accounts will now reflect as ‘settled accounts’ in the credit report.
  • Accounts with the ‘settled’ qualification affect your credit score. However, you can take the necessary steps to repair your credit

Let us See What You Can Do to Improve Your Credit Score

  • You might have other accounts outstanding in your name. You should ensure that you repay the instalments on time without any default. Every payment you make can go on to improve your credit score.
  • Maintain the right balance of secured and unsecured accounts in your portfolio. Banks are very particular about how you deal with the unsecured loans. Repaying your unsecured loans on time is a good sign of creditworthiness.
  • Continue using your credit. Your credit score depends on your repayment patterns. In case you do not avail any loans, there is no question of repayment. Hence, your credit score will not improve.
  • Ensure that you maintain the ideal proportion of your outstanding loans to the credit limit. It is better if you keep a ratio of around 30%. It is possible in case of your Credit Cards and other running accounts like the overdraft accounts.

These steps can improve your credit score. Therefore, you will be able to browse for the Best Credit Card Deals once your credit score crosses 700 or 750. Now, you need not worry and ask the question, “How Can I get a Credit Card if I have settled accounts in my profile?”

Also Read: 6 Healthy Habits for Credit Card Users

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