CIBIL Written Off: Meaning, Status & How to Change It

If you want to increase your probability of securing a loan, it is very important to ensure that you have a clean CIBIL report. It should not contain a 'written-off' status, which can deeply impact your overall CIBIL score for the future. Let's understand what it means and how to change the written-off status.

What does a Written-off status in a CIBIL report mean?

The written-off status usually appears in your CIBIL report if you had taken a loan and were unable to repay, thereby enabling the lender to write-off the borrowed money. It is a disadvantage as it is an indicator that you are not someone who could be trusted with money in future. This in turn, drops your CIBIL score considerably and makes you a defaulter candidate in case you were to apply for a loan in the future.

How to remove Written-off status from your CIBIL report?

First and foremost check for errors on the CIBIL report. Many times incorrect information may lead to a ‘written-off’ status on your CIBIL report. Also check if a ‘Closed’ account is marked as ‘Written-off’ on your CIBIL report. If neither of these apply then you will have to go through a time-consuming and challenging process removing the written-off status includes the following steps:

Step 1: Contact your lender: Reach out to the lender to determine the exact amount you owe.

Step 2: Negotiate a repayment plan: Discuss with the lender how you can repay the outstanding amount.

Step 3: Obtain a "No Dues Certificate." Once the loan is fully settled, request a formal document from the lender stating that the dues have been cleared.

Step 4: Inform the credit bureau: Ask the lender to update your credit report with the latest loan status.

Step 5: Raise a dispute with CIBIL: If the lender is slow to update the bureau, you can directly contact CIBIL to dispute the "written off" status.

Step 6: Provide supporting documents: Submit the "No Dues Certificate" and any other relevant documents to CIBIL.

Step 7: Follow up: Continue to follow up with CIBIL until the "written off" status is removed from your report.

Remember: CIBIL cannot change the status on its own. It's essential to first address the issue with your lender and obtain the necessary documentation to support your dispute.

How to avoid a write-off? 

Now that you are aware of what a write-off in your CIBIL report is and how badly it impacts your creditworthiness or CIBIL score, here are a few steps that you can take to avoid it:

• Before applying for a loan, do proper homework and assess your ability to pay your monthly installments.
• Invest some time in researching. Compare and analyse the different loan options and select the one that best fits your goals. Preferably, go for the ones offering the lowest rates and longer tenure options. 
• Before you sign any loan agreement, read between the lines and check if the lender has included any hidden charges. 
• Create a budget and stick to it to control any unnecessary expenses
• In case if you think there is a risk of loan default, it's advisable to connect with your lender and explain your situation to reach a mutually agreeable solution 

Can ‘Written-off’ Status Affect Loan Approvals?

Yes, written-off status on your credit report can significantly influence loan approvals:

• Reduced Loan Approval Chances: A loan write-off can severely decrease your likelihood of securing a loan. 
• Higher Interest Rates: Even if a lender approves your loan, expect higher interest rates due to your default history.

It's important to note that credit bureaus don't maintain a "defaulter list," so there's no need to worry about removing your name from such a list.

Conclusion

A "written off" status on your CIBIL report can negatively impact your creditworthiness and future loan applications. Understanding what it means and taking proactive steps to address the issue is crucial. By following the outlined steps, you can work towards removing the "written off" status and improving your CIBIL score.

FAQs

Q1. Can I remove a "written off" status from my CIBIL report myself?

Ans. While you can initiate the process by contacting CIBIL, it's essential to first address the issue with your lender and obtain the necessary documentation.

Q2. How long does it take to remove a "written off" status?

Ans. The timeline can vary depending on the lender's responsiveness and the complexity of the situation. It may take several weeks or even months to resolve.

Q3. Can a "written off" status affect my ability to get a credit card?

Ans. Yes, a "written off" status can significantly impact your chances of getting approved for a credit card. Lenders often consider your credit history when assessing your eligibility.

Q4. Will a "written off" status remain on my CIBIL report forever?

Ans. No, the status will typically remain on your report for seven years from the date of default. However, if you successfully resolve the issue and make consistent payments on other loans, your credit score can improve over time.