How To Remove Name From CIBIL Defaulters’ List?

Every person with a credit history in terms of availing a loan or using a credit card, which is another form of a loan including an interest-free credit period, is given a score by independent agencies. This three-digit score captures the creditworthiness of the person and is a key factor taken into consideration by lenders of all size while receiving a loan application from the person.

The score lies in the range of 300 and 900. A higher score is an indicator of higher probability of repaying the borrowed amount. The score is based on various aspects including repayment schedules of loans availed in the past, the mix of loans availed and more.

But there are instances where the score gets a red flag. This can be due to two factors: One could be genuine and another could be due to an error in reporting.

Genuine vs Incorrect Default

In the case of the former, one may have missed a payment of an equated monthly installment or the amount that is to be repaid every month as part of the overall repayment plan. As a result, this shows as a default in the system. While the person may have paid back all of the other dues and if one misses communication from the lender that is sent as a reminder, one may think he or she has paid back the loan but there could be a part of the loan that is pending and indeed piling up as the fees associated keeps getting compounded.

That said, it happens rarely but there is a possibility that an error has sprung up. This could be due to missed updation of a payment that has been made. This leads to a negative noting in the credit report that also ends up pulling down the score. It also happens that a credit account is incorrectly tagged to a person and because of that the credit score gets pushed down. If one keeps checking their report periodically, those errors or even genuine noting can be spotted and corrected.

Credit scoring companies have devised a simple process through which one can get the errors sorted.

This can be done by raising a dispute online with CIBIL or at its office in Mumbai.

Steps To Remove Name From Defaulters’ List:

1. Check The Credit Report:

The preliminary step is to monitor the credit score report and pick errors if any related to wrong personal information, incorrect loan account, wrong outstanding balance etc. It could also help one identify an actual missed payment for an old loan.

2. Pay Back or Submit Dispute Form:

If one has actually missed a payment due for a past or an existing loan, the first thing one should do is to pay the outstanding amount with all interest and fees due. Once done, a formal request has to be made to the lender to update the records for the future. If a new loan enquiry is made then the updated data will not show as any outstanding. On the flip side, for removing a wrong default entry, one can file an online dispute with the credit bureau.

Here’s a step-by-step guide on how to resolve a credit default dispute:

• One would need to access the dispute resolution area of the website and fill out the associated form. This would involve keying in the nine-digit number from the credit report that has the information under dispute. One would need to log into myCIBIL and move to credit reports section and within that check the subsection under ‘Raise a Dispute’. The form has to be filled and submitted online.

• After the CIBIL dispute form has been submitted online, the credit information bureau or agency will verify the dispute and may approach the bank or lenders. This is because, the agency itself cannot change any part of the credit report without ascertaining from the lending institutions.

• The borrower must keep track of resolution. This is an important aspect to ensure the problem is resolved. A wrong entry gets corrected in a CIBIL credit report, typically, within a month. But sometimes this takes longer. However, lenders need to come up with a proper solution for the dispute flagged by the borrower within 45 days, according to the rules. This ensures one doesn’t end up waiting endlessly for a resolution and an applicant is informed of the decision soon. The applicant can also raise another request with CIBIL for a resolution if the reply is not satisfactory.

Conclusion

A higher credit score presents a positive picture of creditworthiness and vice versa. But at times, the credit report carries a default note for a past or existing loan account. This could be a genuine default or an incorrect entry. Either way, it negatively impacts the CIBIL score. One should periodically check the credit report for any errors or even inadvertent genuine defaults and make sure it is cleared to make the slate clean for the future.

The credit score, or the CIBIL score, is a key factor for most loan applications and could determine if it gets a green or red signal, especially from reputed lenders like IIFL Finance.

IIFL Finance, one of the biggest non-banking finance companies, has a bouquet of loan products that can be availed through a hassle-free digital process. The lender offers the most competitive interest rates and flexible repayment terms to people with strong credit scores.