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How can I Remove my Name from CIBIL Settlement?

How can I Remove my Name from CIBIL Settlement?

finance
August 12, 2022
3 min read
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How can I Remove my Name from CIBIL Settlement?
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A loan settlement reflecting on your CIBIL credit report can ruin your credit score along with the chances of getting good offers on your future loan and credit card applications. A lender or a financial institution will always evaluate your credit report while assessing your application for a loan. If your name is in the list of CIBIL defaulters for a loan settlement, you must get it removed. 

Whenever you apply for any credit product – be it a loan (both secured and unsecured) or a credit card – your CIBIL credit profile goes through a review. That is because lenders needs assurance that you have the financial capability to repay the debt that you are asking from them. The assurance they need can be built by assessing your CIBIL credit report which has all the details about your financial history. Hence, it is said that maintaining a good CIBIL credit score is of utmost importance. So, what is a CIBIL settlement and how do you remove your name from it? 

How to Remove a Loan Settlement Status from your CIBIL Credit Report?

Your lender will file a complaint with the court after you have defaulted on your debt, which results in a lawsuit. This is done in order to help the bank or financial institution recover the money you borrowed from them. Your information will appear in the public database if you have purposefully or accidentally exceeded the Rs. 1 crore threshold or the Rs. 25 lakh threshold.

In such a case, generally, we reach out to the lenders asking for an out-of-court settlement. In this settlement, if you agree to pay the entire amount that is left for you to repay, the lender has to withdraw the law file suit against you. However, remember, the case can only be withdrawn when you repay the unpaid debt. 

The lender needs to update CIBIL once you make the payment, so that your loan settlement status is updated. This is an easy way to remove your name from CIBIL settlement list if you agree to repay the entire amount. 

There could be another possibility wherein you may ask the lender for some concession on the loan amount. They may agree to that as well. And instead of making a repayment of the entire amount, you pay whatever you and the lender has mutually agreed upon. The law suit will be dropped off your name, however, a status of “Settled Account” will reflect on your CIBIL credit report for 7 long years. 

This can cause a lot of troubles for you in the future to get good and affordable loans and your desired credit limit on the credit card. 

Tips to Avoid Getting your Name on the CIBIL Defaulter List

Ultimately, you must make every effort not to land up on the CIBIL defaulter's list. If you continue to believe that there is an uncertainty and you won't be able to repay your debts, look for a workable alternative. Speak with your lender and consider the options they are prepared to provide you.

There is no turning back once you have defaulted on a loan, especially if you did it intentionally. Legal repercussions might significantly lower your credit score. Don't be afraid to ask for help and advice if you are having trouble paying back your debt. Here are a few tips to consider that will help you avoid getting into the CIBIL defaulter’s list: 

  1. Repay your debts on time and in full. Do not ever take out a loan that you cannot repay. Not repaying your loans and debts on time can have severe repercussions on your CIBIL credit score. If you think that your debts are not manageable, contact to a financial advisor who will be able to work out a debt plan for you. 
  2. Review your CIBIL credit profile regularly. It may happen that due to some human error or any fraud, your name has been reflecting in the CIBIL settlement list. If that is the case, raise a dispute to CIBIL for removing the settlement status from your credit profile. 

To get new or increased credit limit on your card, it is essential to have a clean CIBIL record. However, there may be occasions when your CIBIL credit report contains mistakes because of wrong money management, inaccurate data, fraudulent use, etc. Therefore, it is advised to check your CIBIL report, or credit score, once every six months to stay on the right track of financial management. If a loan or credit account on your CIBIL report has the "written-off" label, you must first confirm that it is accurate. If changed erroneously, a "closed" account could occasionally be labelled as "written-off." Such mistakes must be corrected as soon as possible by submitting an online dispute with CIBIL.

Step by Step Process to Raise a Dispute with CIBIL for Wrong Loan Settlement Status on Credit Report

If your CIBIL credit profile has been mistakenly updated with a loan settlement status, you must immediately raise a dispute with CIBIL to get it removed. Here is how you can raise a dispute with CIBIL for removing your name from CIBIL settlement:

  1. Visit the official CIBIL website and create an account. If you already have an account on CIBIL, enter your credentials to log in. 
  2. Click on “Credit Reports” and go to “Dispute Centre” and then select the “Dispute an Item” option. 
  3. Fill in all the details in the CIBIL dispute form online. 
  4. Select the “Dispute Type” and click on “Submit”. 

That’s all you have to do to raise a dispute with CIBIL. The credit bureau will take it up with the lender or the financial institution who had updated your wrong status to CIBIL. Remember that CIBIL cannot make any changes to your credit profile on their own. 

Lenders may be reluctant to offer you an unsecured loan after debt settlement because you weren't able to pay your previous obligations in full. However, there is a chance to get a secured loan by giving the lender a security interest in something. Also keep in mind that if you make timely payments on a secured loan, your CIBIL score will increase more quickly. Additionally, you gain access to advantages like quick loan approval, lower rates, little to no paperwork, etc.

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FAQs Related to Removal of CIBIL Loan Settlement

How can I remove “Settled” from CIBIL credit report?

Pay the outstanding dues on your debt to remove “Settled” status from your CIBIL credit report. Once you pay the outstanding amount, get a No Objection Certificate, otherwise known as NOC from your lender and share it with CIBIL. 

How many years CIBIL will keep the record of the defaulters? 

CIBIL will keep the record of defaulters for 7 years from the date of first report. Hence, if your name is already in the list of defaulters, take necessary actions to get it removed from the list of defaulters and get the CIBIL credit report updated. 

Can a settled account be removed from CIBIL credit report?

Yes. A settled account can be removed from CIBIL credit report. You have to pay the entire outstanding amount on your debt to get a clearance from the lender or financial institution. Get an NOC (No Objection Certificate) from the lender after you pay off your dues to get the status of “Settled” removed from your CIBIL credit report. 

Can a defaulter of CIBIL get a loan after 7 years?

Your record of defaulting on a loan will reflect on your CIBIL credit report for 7 years. Although you can still apply for loan with lenders who may accept your loan application with a settlement status on your CIBIL credit profile.