CIBIL Score: For how many years does CIBIL score remain bad after loan default, know the way to improve it

CIBIL Score: If the loan defaults, it means that if you do not repay it on time, your credit score (CIBIL Score) gets spoiled. Not repaying the loan gets the notoriety of default which spoils your CIBIL score. Later, if you go to any bank to take a loan, you will either not get the loan or even if you get it, you will have to pay a lot of interest along with huge hassles.

A similar situation happens when a loan is taken and there is default. Next time you go to any bank to take a loan, you will not get the loan and even if you get it, it will be at a higher interest rate with huge hassles. Now the question is whether CIBIL Score gets spoiled from birth to birth? Is there no scope for any patching or improvement in it? If this were the case then people would probably never have defaulted on the loan. There must be some scope to open the way forward, to get some loan.

Understand with this example

Let us understand the basics of CIBIL Score with a simple example. Suppose you have taken a loan from a bank to build a house. Initially you kept paying the loan installments (EMI) but suddenly your business collapses or your financial condition becomes weak. In this situation, you have no option but to stop the installment (loan EMI). As soon as the loan installment stops, the bank puts you in the default category.

After this, the financial situation improved and you paid the remaining amount of the installment and the interest accrued on it to the bank. With this you would think that the score (CIBIL Score) that has been damaged will be compensated. You had good expectations, but experts told that despite doing everything, your CIBIL score will remain bad for at least 2 years. Pay the pending installment or even pay its interest, CIBIL score does not improve for 2 years and its loss is seen in many financial needs.

CIBIL score error cannot be hidden

The air of CIBIL score is such that its waves reach every corner. Meaning, the negative ranking of your CIBIL score reaches every bank and finance agencies. Whenever you next go to any bank for a loan or to finance companies for a car loan, they will immediately know your negative scoring.

In such a situation, either you will not get the loan and even if you get the loan in Chirauri and Muravvat, the interest rate will be charged at higher rates. At that time you come to know very well about the importance of CIBIL score.

How to improve CIBIL score

The credit score gets positive by looking at your transactions and payments on credit cards or major bills. Do not delay payment of bills, pay bills on time and pay in full. Like pay the entire credit card bill, not the minimum due amount. This improves the CIBIL score. Some time people do not take NOC from the bank after repayment of loan it on time, due to which the CIBIL score goes negative.

NOC should be taken immediately from the bank, only after which your data on CIBIL is updated. The same thing applies with credit cards. If you close a credit card, complete all the paperwork with the bank. Take the certificate of closure of credit card from the bank. All these things improve the CIBIL score.

How many times does CIBIL score get spoiled by checking?

When you check your credit score (CIBIL Score Check) yourself, it is called soft enquiry, it does not affect your CIBIL Score. If you are going to apply for any kind of loan or credit card, then you must check your CIBIL score once. But when a lender like a bank or other finance company checks your credit score, it is called hard inquiry. If many lenders check your CIBIL score simultaneously, it can affect your CIBIL score and wherever you apply for a loan in the future, they will definitely look at it in a negative light and due to this you may face problems in getting the loan. .

In fact, every time you get a hard-enquiry, your credit score goes down a few points. Your credit report gives details of when hard inquiries have been made on you. From this point, an advice also emerges that you should not apply for loan multiple times in a short period of time, because before giving you loan, lenders will ask for your credit report from the credit bureau, due to which your CIBIL score may fall significantly. So overall, if you check your CIBIL score by yourself then there is no problem, but if your credit score is not good and many lenders check it then your credit report can get spoiled, so it is important for you. Stay updated about your score and be cautious about loan repayments, so that you can maintain a good CIBIL score.

Reserve Bank (RBI) has made many rules regarding CIBIL Score. There were many complaints regarding CIBIL score, after which RBI has tightened the rules. Under these, the reason for non-correction of data in the credit bureau will also have to be given and the number of complaints will also have to be mentioned on the credit bureau website.

Apart from this, the Reserve Bank of India has made many rules. These new rules will come into effect from 26 April 2024. The Reserve Bank had warned about implementing such rules in April last year itself. Let us tell you that whenever a customer applies for a loan, the banks first check his CIBIL Score. Under this, the Reserve Bank has made a total of 5 rules. Let us know about them in detail.

1- Customer will have to send information to check CIBIL score.

RBI has told all the credit information companies that whenever a bank or NBFC checks the credit report (CIBIL Score Check) of a customer, it is necessary to send this information to that customer. This information can be sent to the customer through SMS or email. Actually, many complaints were coming to the fore regarding CIBIL score, due to which RBI has made this rule.

2- It is important to give the reason for rejecting the request.

According to the central bank, if any request of a customer is rejected then he will have to give the reason for it. This will make it easier for the customer to understand why his request has been rejected. It is important to make a list of these reasons and send it to all credit institutions.

Full credit report will have to be given free once in 3 years

According to the Reserve Bank, credit companies should provide free full credit score to their customers once a year. For this, the credit company will have to display a link on its website, so that the customer can easily see his free full credit report. With this, customers will know their CIBIL score and complete credit history once a year.

4- Customer must be informed before reporting the default

According to RBI, if a customer is going to default then it is important to inform the customer before reporting the default. Loan giving institutions will give all the information by sending SMS/e-mail. Apart from this, banks and loan disbursing institutions will have to appoint nodal officers. Nodal officers will work to resolve credit score related problems.

Complaint will have to be resolved within 5- 30 days

If the credit information company does not resolve the customer’s complaint within 30 days, then it will have to pay a fine of Rs 100 per day. That is, the more late the complaint is resolved, the higher the fine will have to be paid.

The loan disbursing institution will get 21 days and the credit bureau will get 9 days. If the bank does not inform the credit bureau within 21 days, the bank will pay compensation. If the complaint is not resolved even after 9 days of informing the bank, the credit bureau will have to pay compensation.

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