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How to Remove Name from CIBIL Defaulters List?

Updated on: 05 Apr 2022 // 21 min read // Personal Loans
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Whether you need to purchase a new car, buy a home, pay your child’s education fee, clear a hospital bill or more, a Personal Loan or a Credit Card can come handy to meet all or one of these financial obligations.

However, your creditworthiness for the same is determined on certain factors. The lender would assess whether you have a steady stream of income to prove your ability to repay the loan, or not. Hence, a good Credit Rating is a must to have, as it assures the lender of your willingness to pay back their money on time.

While your documents will verify the income & identity proof; for your Credit Score, the lender will seek the information from Credit Information Bureau (India) Limited, also known as CIBIL.

Hence, if any of your loan applications have been turned down, despite the submission of all the required documents, the chances are that it is because of your low Credit Score.

In case, you have been irresponsible with your loan payments before, or have defaulted on a loan; the bureau will convey the same to the lender, who, in turn, will reject your loan application.

Also Check: Credit Policy of Banks

Aadhar Card Personal Loan

That being said, you need to bust one of the common myths regarding CIBIL Defaulters List. Regardless of what your score is, you will never be on the CIBIL Defaulters List. For, there is no such list on records.

While the Credit Bureau does maintain the Credit Records of individuals as well as commercial entities, with respect to Credit Card payments and loan borrowings & repayments, it does not maintain any list of defaulters per se. Every month, banks and other lenders report the payment record of the borrowers to the bureaus, on the basis of which these records are maintained.

When you Apply for a Personal Loan, your lender approaches the Credit Bureau to check your Credit History and Credit Score.

If you wish for your loan applications to be approved in a hassle-free manner, it is important that you do not carry the unwanted tag of being a ‘Defaulter’. To make this possible, you should follow the below mentioned tips:

Assess Your Credit Report

To this end, you can order a free (or paid) copy of your Credit Report from CIBIL by visiting myscore.cibil.com. Once you receive the copy, you can then carefully examine it to understand where you went wrong.

In some cases, the reason for your low score may be missed EMI payments, delayed Credit Card bills, etc. You can work on these areas to improve your score over time.

However, there are times when your score might be affected due to one or more discrepancies in the Credit Report, often caused as a result of a human/computer error. In such cases, you can report the issues to CIBIL, and get them rectified.

Pay Off Your Dues

When it comes to loan repayments, a delay or default is raised as a red flag from the lender to the bureau. In case of the loan settlement, it would reflect as ‘settled’ or ‘written off’ on your credit report, which will essentially act as a warning to your new lender about your irresponsible behaviour as a borrower.

To avoid this from happening, make sure you have repaid all your loans in full. Check your Credit Score after a span of 3 months, and see if the score has improved. Only if it has shown the desired upswing, should you go on to apply for a new loan!

Additional Reading: What is cibil grievance?

Pay Your Bills in Time

If you have a Credit Card in your name, make sure to pay all your bills on time. Paying only the minimum dues, and carrying forward the remaining balance will not only accrue interest but will also get reported to the Credit Bureau, thus resulting in a decrease in your Credit Score. Repeated delays in Credit Card payments will push down your scores even further, showing you in a bad light.

To avoid this, make sure to pay your Credit Card bills, in full and on time, every single month.

Maintain a Low Credit Utilisation Ratio

In an ideal scenario, you should utilise only 30% of your Credit Limit in any given month. A low Credit Utilisation Ratio is perceived by the lender and the Credit Bureau as a sign of your efficient financial management and low dependence on credit to pay for your day-to-day expenses. Spending over 50% of your limit might raise suspicion on your ability to manage your finances, and may have a negative impact on your Credit Score.

Hence, make sure to spend as little as possible using your Credit Card, especially when you are looking forward to improving your Credit Score.

Opt for One Loan At a Time

If you apply for multiple loans within a short span of time, the Credit Bureau sees you as a credit hungry individual who is in desperate need of financial aid. This goes on to prove that you are not in control of your finances, thus poorly affecting your Credit Score.

You can avoid this situation by ensuring that there is a sufficient gap of at least 9-12 months between two loan applications. This will not only improve the chances of approval but will also make it easier for you to manage the EMI payments.

We hope that you now have a fair idea of how to steer clear from being a defaulter, and to improve your Credit Score, thereby ensuring a higher probability of getting your loan applications approved.

Also Read: Top 10 Factors Affecting Your CIBIL Score in 2019

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