How do you save yourself from becoming a CIBIL defaulter?
Your credit score is one of the few indicators that reflect your creditworthiness when asking for a loan or a credit card. It is a critical criterion by which a creditor assesses your repayment capacity. If you've been turned down for a loan or a credit card, it's most likely because of your bad credit.
The major function of CIBIL is to collect and store an individual's payment records for loans and credit cards. Every month, these payment records are reported by the member credit institutions, which include various financial institutions such as private banks and other lenders. The credit policy of a credit institution, such as a bank, determines whether or not a person is approved for a loan.
Firstly, keep an eye on your credit report. It's like checking your financial health. Look for any mistakes or inaccuracies and get them fixed. When you apply for a loan, these credit organizations look at your credit score and credit history to see if there are any blemishes on your record.
So, if you want to avoid being labeled a "defaulter," you'll need to keep your credit score in good shape. To assist you, the following are some key considerations to keep in mind while removing your name from CIBIL's defaulter list:
Check your credit report.
Carefully examine your credit report; this will help you comprehend any disparities and confirm that the information on the report is accurate.
Clear off your outstanding dues.
The best strategy to enhance your credit rating is to pay off all of your existing debts on schedule. To do so, speak with your creditor and work out a payment plan. Wait three months after your debts have been paid off before reviewing your credit report to see if it has been updated.
Do not exceed your credit limit.
Try not to use up more than 30% of your credit limit. This will ensure that your credit score remains good at all times.
Do not apply to multiple loans and credit cards at one time.
You are eager for credit if you apply for many loans and credit cards in a short period of time. Lenders may grow concerned about your capacity to repay, and your credit application may be denied. Each refusal lowers your credit score even further. As a result, apply for only one loan or credit card at a time. This facilitates payments and increases the likelihood of your credit application being granted.
How can you avoid being on the default list?
The following is how you cannot be a part of the CIBIL defaulter’s list:
- The key information required for the CIBIL defaulter's list is the control number (CN). Each time a financial institution requests your CIBIL report, a unique CN will be generated. A CN is a nine-digit number that makes your credit report easily accessible and traceable.
- If you want to improve your credit score or remove your name from the list, you must find out your credit information report (CIR). This will enable you to check for any advance or credit that you may have defaulted on. Subsequently, you can take measures to address the situation, enabling you to remove your name from the defaulter's list.
- One thing you can do immediately is to avoid having multiple credit cards. Too many credit cards will imply that you are highly in need of credit, which makes the chances of defaults very high.
- You must also check whether the outstanding loan amount and Days Past Dues (DPDs) reflected in your CIBIL report reflect the true story.
Last but not least, make all payments related to your credit outstanding punctually. Forget what you have done in the past and start making equated monthly installments (EMIs) on time. This will improve your credit score, even if it is not in good shape currently. Lastly, always pay your bills on time. It's like being punctual with your financial commitments. Even if your credit score isn't great now, consistent on-time payments will help improve it over time.
Conclusion
In conclusion, maintaining a good credit score is crucial to avoid being labeled a defaulter by institutions like CIBIL. Regularly checking your credit report for errors and paying off outstanding debts on time are key steps. Avoiding maxing out credit limits and applying for multiple loans simultaneously also helps. To prevent being listed as a defaulter, ensure accuracy in your credit information report, limit credit card usage, and prioritize timely payments. By adhering to these practices, you can gradually improve your credit score and financial reputation, paving the way for better access to loans and credit cards in the future.
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