How to Remove a Bad Repayment Track From CIBIL Report?

When you apply for a Home Loan, your lender considers several different factors such as age, nationality, employment type, and income to assess your application. Another important factor that they consider is your CIBIL score.

The CIBIL score is a three-digit numerical representation of your creditworthiness and repayment capacity. Typically a CIBIL score of 750 or above is considered good. The closer you are to the score of 900, the better your chances of being approved for a loan at lucrative terms and conditions, such as a low rate of interest, higher loan sanction, and long repayment tenure.

While a good CIBIL score can improve the chances of loan approval, a low CIBIL score can make it challenging to secure a Home Loan. A bad repayment history—including missed EMI payments, late payments, loan defaults, excessive credit utilisation, and frequent loan applications—can lower your CIBIL score.

How Does a Bad Repayment History Impact Your CIBIL Score?

The most important factor that affects your credit score is your repayment history. Repayment history reflects your credit management. Failing to pay EMIs or credit card bills or defaulting on loans can reduce your CIBIL score.  

Other factors such as credit utilisation ratio, credit mix, and new credit applications can also affect your credit score.

How to Remove Bad Repayments from Your CIBIL Report

If you are planning to apply for a Home Loan or any other loan but do not have the right CIBIL score, follow these steps to address discrepancies in your CIBIL report:

Identify the Issue in Your CIBIL Report

●    The first step is to check your CIBIL report and identify any incorrect or negative entries that may be affecting your credit score. You can access a detailed report from the official website of TransUnion CIBIL. 

●    To view your report, you need to fill out an application form and pay a small fee based on your chosen subscription plan.

Dispute Incorrect Entries with CIBIL 

●    If you find an error or an incorrect repayment record in your report, you can dispute it with CIBIL. You can raise a dispute online through the CIBIL website, requesting them to verify and correct the inaccurate entry. 

Handling Genuine Negative Records 

●    If the negative record is due to missed EMIs, loan defaults, or other repayment issues on your part, it cannot be removed from your CIBIL report. 

●    In such cases, you should focus on improving your credit score by making timely payments, reducing outstanding debts, and maintaining a healthy credit utilisation ratio.

If your CIBIL score is low due to genuine defaults, consider improving your creditworthiness over time rather than seeking the removal of accurate records.

Also Read: How to Increase Your CIBIL Score Above 800

How to Dispute Incorrect Late Payments on Your Credit Report

If you have identified an incorrect late payment on your TransUnion credit report, follow these steps to dispute it:

1.    Request a copy of your credit report from TransUnion by visiting their official website. 

2.    Review the report thoroughly to identify any inaccuracies, such as late payments that were reported incorrectly.

3.    Collect documents such as bank statements, payment confirmations, or correspondence with the creditor to show that the payment was made on time.

4.    Visit TransUnion’s official website and use their dispute resolution section to submit your request. Provide necessary details and upload supporting documents.

5.    TransUnion will review your dispute and verify your request with the lender. This process may take up to 30 days.

6.    If the lender confirms the error, TransUnion will update your credit report accordingly.

7.    Once the dispute is resolved, check your credit report again to ensure the correction has been made.

How to Remove Unauthorised Enquiries from CIBIL Report?

You can file a dispute with TransUnion CIBIL to have an enquiry removed from your CIBIL report if you discover one that you did not authorise, such as one that wasn't prompted by your own loan or credit card application.

1. Obtain the most recent CIBIL report
First, use the official CIBIL website or your ‘myCIBIL’ account to download your most recent CIBIL credit report. To find the unauthorised enquiry, carefully go over the ‘Enquiry Information’ section.

2. Determine the Unauthorised Enquiries
You can only dispute enquiries that weren't made by you, such as those brought about by identity theft, data errors, or lender errors. Make sure you record the dates and the name of the organisation that made the enquiry.

3. Raise a Dispute with TransUnion CIBIL
TransUnion CIBIL provides a dispute resolution process for correcting inaccurate information on your credit report. To start:

• Log in to your ‘myCIBIL’ account and go to the ‘Dispute Centre’.
• Select the ‘Credit Application History/Enquiries’ section to raise your dispute online.
• Provide details about the unauthorised enquiry and upload any supporting documents (if available).

4. CIBIL Will Investigate the Dispute
Once submitted, TransUnion CIBIL will investigate your dispute by contacting the lender or institution that furnished the enquiry. If it is found to be unauthorised or incorrect, the enquiry will be updated or removed from your report. The verification process may take some time as CIBIL confirms details with the reporting institution.

How to Avoid Late Payments?

Making late payments can result in additional fees and negatively affect your credit. A few easy habits can help you avoid late payments:

• List all of your bills, along with their amounts and due dates. When everything is in one place, it's easier to plan ahead and ensure you have enough money set aside for sizeable payments.
• Set up automatic payments for credit cards, utility bills, and loan EMIs. This reduces the likelihood of missing a deadline and eases the burden of remembering each payment.
• Set calendar or banking alerts a few days before each due date. It allows you ample time to organise your finances and avoid last-minute stress.

How to Improve Your CIBIL Score?

If you check your CIBIL score online and find out it is much below 750, do not worry. By the tips given below, you may be able to avail of a Home Loan at favourable terms:  

●    Try improving your CIBIL score by following healthy credit practices diligently. Improving your CIBIL score involves timely bill payments, reducing credit card balances, avoiding multiple loan applications, and checking your credit report regularly for errors or discrepancies to rectify them promptly. 

●    To increase your chances of getting approved for a loan, apply for a loan amount lower than what you are eligible for. This will increase your lender’s confidence in your repayment ability, and they might approve your loan even if you have a low credit score.

●    You can also get approved for a loan even with a low CIBIL score by adding additional income sources to your loan application. The idea is to convince your lender of your repayment capacity.

●    If you have a low CIBIL score and you wish to avail of a Home Loan, add a financial co-borrower or guarantor. This financial co-borrower or guarantor must be someone with a high CIBIL score and excellent repayment capacity.

●    Yet another thing you can do is take a small loan amount and pay it on time. This will help you improve your credit rating over time and increase your chances of availing of a Home Loan on beneficial loan terms and conditions.

Read Also: Everything Need to Know About How to Check Cibil Score 

Conclusion

If you are planning to apply for a loan of any kind, be it a Home Loan, a Loan Against Property, or a personal loan, know that a good CIBIL score will help you get approved for a loan. However, if you do not have the required CIBIL score, do not worry. If your CIBIL score has decreased due to an error in your report, dispute the error immediately. You can also request CIBIL to remove the error due to which your credit score has decreased. Use various tips given in this article to enhance your chances of getting approved for a Home Loan.