How to Get Out of a Bank Loan Defaulter's list |
Posted: January 27, 2017 |
When you approach a bank for a loan, the first thing the prospective lender checks is your credit report. Your credit report contains information about your credit history as well as your credit score. Based on the credit report, the financial institution will decide whether to approve or reject your loan application. In order to get a loan approval from a bank, it is very important that you do not have any delays or defaults mentioned against your name. While CIBIL or any other bureau does not maintain a defaulters list, banks can update the status of a particular account with the credit bureau. If payments are not made intentionally, banks can update the client’s status as wilful defaulter. It is important to note that rating agencies do not maintain any defaulters list. Rather, they only collect data relating to delays or defaults and classifies it under various categories, depending on the nature of it. A lender will interpret it based on their credit policy. So if you have ever found your name under the bank’s loan defaulters list, there are actions you can take to get out of it and increase credit score.
There is nothing a credit bureau can do to get your out of a bank’s loan defaulters list. To do so, you would have to reach out to your respective lender. Work out a payment plan with the financial institution to clear all delays or defaults. Once the pending payments are made, the default status will eventually be removed from your credit report which in turn will increase credit score but only after some time. Keep checking your CIBIL rating online after you have worked on a plan with the lender. When you look at your CIBIL rating online, you will get to know the impact that a particular delay or default had on your score. If the record has not been updated even after you have cleared all your dues then you need to inform the bank about the same.
Your must also get into the practice of regularly checking your credit report and CIBIL rating online. Sometimes you can land in a bank’s loan defaulters list due to a human error. Make sure to check your name, address, PAN and other personal information in your credit report. Also, you can appear in the loan defaulters list when there is an error in reporting. Your financial institution can unknowingly mark another person’s information as yours and send the same to the credit bureau. When you spot such mistakes, raise a CIBIL dispute with the bureau. The credit bureau will inform the respective financial institution about the same and the error will be rectified. Once the mistake is corrected, the bureau will also increase credit score. Keep in mind that it takes about thirty days for a mistake in the credit report to be rectified.
In order to keep yourself from even landing in a bank’s loan defaulters list, you need to start practicing financial discipline at the earliest. Always ensure that you pay all your bills on time. When you fail to make multiple loan repayments you can be sure to find yourself in the loan defaulters list. Lending institutions take caution when dealing with those in the loan defaulters list. Hence, it is important to make sure that all your bills are paid on time. When all your payment are made on time, you are sure to find your creditworthiness go up when you check your CIBIL rating online. Every effort must be taken to increase credit score because when you are attempting to increase credit score, you are limiting the possibility being labelled as a defaulter. If it helps, start an account where funds are reserved solely for the purpose of paying your bills.
Never make the mistake of looking like a credit hungry customer. When you apply for too many loans or credit cards, you will find that your score get affected when you look at your CIBIL rating online. Holding too many loans and credit cards increases the possibility of you falling into debt. Keep your spending in check and only apply for credit when you think it is absolutely necessary. As you apply for credit, check on your credit report and CIBIL rating online. By doing this, you stay informed about the effects that hard inquiries have on your credit score. If you have already availed multiple loans, make sure to repay back your EMIs on time and in full. If you have taken out a secured loan, you stand the risk of losing asset you have placed as collateral in case of non repayment. If you have taken out an unsecured loan, legal action can be taken against you for non repayment. Remember there are serious consequences to delaying or defaulting on payment. So put into practice good financial habits and it will help increase credit score.
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