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How to Change the Written Off Status & Clean CIBIL Record?

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You may not be familiar with the term ‘Written Off’ as that’s very typical in itself with its own technicalities. However, you won’t do yourself any favour by continuing to be unfamiliar with the term, particularly if you have had an experience of handling any credit in your lifetime. Yes, the written off term is applicable to loans and credit cards that one gets from banks and non-banking finance companies (NBFCs).

The term actually means that the lender could not recover the outstanding dues from you despite repeated attempts. The lender would then submit the report to credit bureaus, such as CIBIL, as written off against your credit account. It’s a tag that can lead to legal complications as you still owe to the lender. Your credit score also falls to remarkably low with the same.

More worse is that your CIBIL record gets tainted and puts you among the list of defaulters, almost shutting the door for any credit you may look for in times to come. However, you can get the tag changed and your name removed from the defaulter list following the recommendations highlighted in this post.

Check for Possible Errors in CIBIL Report

Mistakes are humane and can make you a victim for no fault of yours. You can check the CIBIL report to see the account on which the written off tag is assigned. You first need to see the number of open accounts in your report. Also check whether it’s your account or not. Also, there can be errors in name or the status of the account. You may have closed the account but the report would read it as Written Off. This can happen with CIBIL possibly failing to update the latest status. Don’t waste anytime, dispute the errors, if remains on the report, on the online platform of CIBIL, which would take a month or so to change the status from written off to closed.

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How to Dispute Errors on CIBIL?

You can dispute such errors on the website of CIBIL. These would involve the following steps –

  • Go to ‘Dispute Resolution’
  • Click on ‘Raise an Online Dispute’
  • Login to CIBIL
  • Go to ‘Credit Reports’
  • Navigate to ‘Dispute Centre’ before clicking on ‘Dispute an Item’
  • Fill the online dispute form
  • Keep the control number with you
  • Choose the relevant section you want to dispute
  • Select ‘Dispute Type’ if you are disputing ownership or duplicate
  • Enter a value for the disputed field if you are disputing data inaccuracies
  • Click on ‘Submit’ in the end
  • Your dispute appeal gets processed

CIBIL would take a month or so to update the latest status.

What to Do If Your CIBIL Record is Poor Due to Missed Payments?

If the CIBIL score is on the red due to missed payments or defaults, you need to get the repayment in order. Firstly, you need to see the reasons that prevent you from paying on time. Is it due to the tall expenses that you make month-on-month or the lack of money on account of job loss? You can do away with unnecessary expenses that you may be making. This would ensure enough savings to pay the loan or credit card dues on time. In the case of a job loss, you can part your savings or take help of relatives or friends to pay the dues. Once the job comes in, you would be able to pay the dues regularly without any hassle. The regular payment would thus ensure a gradual improvement in the CIBIL score and the credit history.

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Can’t Pay the Entire Debt? Settle the Due ASAP & Get the Written Off Status Removed from Your CIBIL Record

The Written Off status would be marked if you don’t pay the debt for long. If you can’t pay the debt in full, it’s high time you contact the lender and look for a settlement deal. The lender can ask for the reasons that stopped you from repaying the debt. The reasons must sound logical and be evidenced with to create an impression that you are not a wilful defaulter.

What is Debt Settlement?

The debt settlement is an agreement between the lender and borrower to make it easy for the latter to pay off the dues. The lender can agree to reduce the debt by giving you a concession on the interest payable. As soon as you repay the agreed amount, the lender would state as ‘Settled’ in its monthly report to CIBIL. The settled status would improve your CIBIL record affected by the written off tag.

The settlement amount and process would, however, depend on the type of credit being availed. For instance, personal loans usually come at an interest rate of 11%-25% lower than 30%-45% charged on credit cards. Most probably, the lender won’t give you any leeway in terms of principal repayment. However, the interest liability can be reduced by virtue of the settlement agreement.

How to Settle the Dues as Agreed and Clean Your CIBIL Record?

You must have agreed on the sum to be paid to the lender over a specific period of time while signing the settlement deal. Most likely, the agreed amount would be far lower than the original outstanding dues. However, you must ensure discipline in your spending routine to save enough to repay the settled debt on time. The general advice would be to cut down the monthly spends by a few percentages till the time the debt is paid off, if not forever. As soon as you repay the whole agreed amount, the lender will report the same to CIBIL as settled, marking a much-needed change in the credit status from written off.

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How Would Lenders Treat You Post the Debt Settlement?

Post the debt settlement, the lender may be hesitant offering you an unsecured loan or credit card as you did not pay the previous dues in full. You can, though, apply for a secured loan against securities such as fixed deposits, National Savings Certificate (NSC), etc. The loan amount can be equivalent to 80%-90% of the collateral value. On the other side, a few banks issue credit cards against the fixed deposit. The credit limit of these cards constitutes around 80%-90% of the fixed deposit value.

Secured credits can raise the CIBIL score faster than usual on maintaining a timely payment routine. Other benefits include lower interest rates, hassle-free approval, no requirement to submit income proofs, etc.

Shall You Glance at the Parameters That Make Up Your CIBIL Score Post Settlement?

The answer is Yes as the settlement may possibly chuck some points off your CIBIL score, which typically ranges from 300-900 in India. The parameters that CIBIL uses to assign scores would thus be pivotal to you in rebuilding your credit history the most desired way. Here’s a list of parameters based on which CIBIL generates the credit score.

Credit AspectsWeightage
Repayment history35%
Amount owed by borrowers30%
Number of years servicing the debt15%
Number and amount of recent loans availed or applied for10%
Credit mix10%

Free CIBIL Score
Personal Loan Interest Rates July 2019
Bajaj Finserv10.99% - 16.00%
Fullerton India14.00% - 33.00%
HDFC Bank11.25% - 21.50%
ICICI Bank10.99% - 18.40%
IndusInd Bank10.99% - 16.00%
Kotak Bank10.99% - 20.99%
RBL13.00% - 18.00%
Standard Chartered Bank11.50% - 18.00%
Tata Capital10.99% - 18.00%
Home Loan Interest Rates July 2019
State Bank of India/SBI8.40% - 9.20%
HDFC8.55% - 9.55%
LIC Housing8.60% - 9.15%
PNB Housing Finance9.05% - 12.00%
Piramal Capital & Housing Finance9.00% - 9.10%
Tata Capital9.20% - 9.35%
ICICI Bank9.05% - 9.30%
Bank of Baroda8.70% - 9.70%
Axis Bank8.85% - 9.10%
Citibank9.00% - 9.85%
Indiabulls Housing Finance Limited8.80% - 11.05%
Kotak Bank8.90% - 8.75%
DHFL9.05% - 9.95%
Reliance Home Finance8.75% - 14.00%