How Long Does CIBIL Keep Records_Banner_WC
How Long Does CIBIL Keep Records_WC
In India, four credit information agencies assign credit scores to borrowers. Of these four, TransUnion CIBIL is the most popular and most used. The credit score that TransUnion CIBIL assigns to borrowers is known as the CIBIL score. TransUnion CIBIL maintains records of over 600 million credit users and 32 million businesses. Based on a borrower’s credit record or credit report, CIBIL assigns them a CIBIL score and lenders assess this CIBIL score to understand the risk involved for the lender in lending money to the borrower. If a borrower has a clean credit report and a good CIBIL score, loan approval does not only come easy but it comes with beneficial loan terms and conditions, such as low interest rates and higher loan sanctions.
However, if you apply for a Home Loan with a bad CIBIL score, your application will most likely get rejected. To avoid this, know how to fix your bad credit score.
TransUnion CIBIL also maintains a list of all loan defaulters known as the CIBIL Defaulters List. However, it is not TransUnion CIBIL but the Reserve Bank of India that compiles this list. In 1997, the Reserve Bank of India issued a notice making it mandatory for all financial institutions, banks and NBFCs to share with it a list of all loan defaulters who have an outstanding of Rs.25 Lakh or above. It must be shared with readers that loan defaulters are of two types: wilful and non-wilful defaulters. Non-wilful defaulters are those who are drowning in debt and therefore, cannot honour their loan obligation. Wilful defaulters, on the other hand, are those who have the money but are still not honouring their repayment commitment. The RBI maintains a list of all wilful and non-wilful defaulters and this list is made available to the public each year. People can download this list from the Reserve Bank of India’s official website. The CIBIL Defaulters list is nothing but the list of people who are on the RBI’s defaulters list.
For How Many Years Does TransUnion CIBIL Keep Record of Defaulters_WC
For How Many Years Does TransUnion CIBIL Keep Record of Defaulters?
If your name has entered the CIBIL defaulter’s list, it will stay there for the next 7 years. Further, since TransUnion CIBIL does not make its own defaulter’s list, it cannot delete people’s name off that list either. TransUnion CIBIL cannot remove your name from this list. The only way for a borrower to get their name removed from the RBI’s loan defaulters list is to pay off the loan. If your name is on the defaulter’s list, the best thing you can do is take measures to improve it. Remember that it will take time for you to improve your CIBIL score after a loan default since a loan default is considered a serious issue by lenders and credit information agencies. Here are a few tips that will help you improve your credit score after a loan default, especially if you are planning to apply for a Home Loan.
If you want to improve your CIBIL credit score after a loan default, the first thing you must do is get into the habit of paying loan EMIs and credit card bills on time. Your credit history makes up 35% of your credit score and is the most important factor that affects your CIBIL score. So, to improve your CIBIL records, focus on creating a clean repayment history. Make it a point to clear all your credit card bills and EMIs on time. Set up reminders so that you do not miss any EMIs or credit card payments. If you do miss an EMI, make it a point to clear it as soon as possible.
Your credit utilization ratio, which is the ratio of credit used to credit available, is another key factor that affects your CIBIL score. A low credit utilization ratio is the mark of a responsible behaviour. For lenders and credit rating agencies, ideal candidates are those who maintain a credit utilization ratio of below 30%. Do not exhaust the limit on your credit cards and do not keep clearing only the minimum amount due if you want to maintain a good credit utilization ratio.
Hard enquiries are enquiries that lenders make to enquire about a borrower’s repayment capacity and creditworthiness. Too many hard enquiries reduce a borrower’s credit score, which in turn, reduces their ability to avail of credit in the future. If you have defaulted on a loan, your CIBIL score would be as it is low. Applying for a new loan in this case will only lead to a new hard enquiry and a home loan rejection, which in turn, will further lower your CIBIL score and your ability to avail of a loan in future.
Lastly, sometimes, a borrower’s name gets added to the defaulter’s list by mistake. Though this happens rarely, one cannot completely deny the possibility of this happening. Borrowers whose CIBIL score has suddenly dropped must, therefore, check their CIBIL records. If the drop is due to an error, report it immediately. If you find your name under the CIBIL defaulters list even when you have never defaulted on a loan, raise a dispute with CIBIL. Doing so would require you to create an account with CIBIL and then raise a dispute by filling their online dispute form.