While making any loan or credit card payment, the information is mentioned on the credit report and this determines the credit score. However, even long after paying off a loan or closing a credit account, the browsing history remains on the credit report. This affects an applicant’s credit score for many more years.
But fortunately, now an applicant can remove settled status from CIBIL permanently. To know how, continue reading further.
3 ways to remove a settled account from CIBIL
As lenders check out credit reports while sanctioning any loan amount, maintaining an error-free credit report is necessary. For that, all applicants must remove settlement from credit report to gradually improve their CIBIL credit score.
But it can often be challenging if one does not have a proper idea regarding this. Check out the below-mentioned ways in order to remove settled status from CIBIL.
Get a free credit report and flag any false information
As per the Fair Credit Reporting Act, if an applicant wants, they can get their free copies of credit history from the credit reporting agencies of their choice. So, ensure to get a free credit report. Also, verify whether information provided there regarding the account is correct and factual or not.
In case of any inaccurate or incomplete information is found regarding any personal details like name or regarding any inconsistencies made in repayments, it should be notified.
Contact any of three bureaus, TransUnion, Experian, or Equifax, for filing a dispute either via mail or online. While filing a dispute, provide all supporting documents and information that proves that the dispute is genuine. The credit bureau will then begin the investigation process within a timeline of 30 days.
In case they find the settled account to be faulty, they will remove it from the account.
Send a goodwill letter
This option is ideal for those CIBIL defaulters who have defaulted on a loan because of any illness or personal injuries. It is a polite way of asking the creditors for removing any negative item from their credit report, as they are at present under no obligations.
Though sending a goodwill letter does not always prove successful, it is worth a try. Particularly, this works only when the applicant is in a long-lasting relationship with the creditor, and maintains a positive credit history throughout. Thus, this option is only applicable for long-term loans like home loans, loans against property, etc.
Here, lenders usually remove account from the credit history by settling on a middle amount that is particularly less than what’s taken, or by making the full payment.
In this regard, several financial institutions extend pre-approved offers to their existing customers. Such offers are available on financial products, such as home loans, loans against property, etc. Customers can check their pre-approved offers by providing their names and contact details.
Wait for the settled account to fall off
In case both the approaches tried before becomes unsuccessful, the account will probably disappear from a credit report. This usually happens based on the status of settled account.
If the settled account possesses any inaccurate information, it might remain in the credit report for a period of seven years. While if the account is closed on good terms with the lenders, it might stay on credit report for a maximum of 10 years.
So, applicants who want to apply for a home loan need to wait for so long for the settled account to fall off. Then they will have a good credit score.
How settled account affects the credit score?
In case an account is settled for a considerably less amount than full owed amount, then it might negatively impact the credit score of a borrower. This is because it refers to breaking a contract duly signed by the applicant after agreeing to its terms and conditions.
The credit or CIBIL score of an individual depends upon the age of applicant’s account, their payment history, and available credit amount. Thus, irrespective of the fact whether the loans are paid in full or partial, with or without any late payments, they will still appear on credit report and affect the credit score.
Thus, in case an applicant’s account is affecting the credit score negatively, they must follow the ways discussed above to remove settled status from CIBIL.