Strategies for removing your name from CIBIL’s defaulter list

If you think that by slipping into the CIBIL’s defaulter’s list, you have lost your creditworthiness and will not be able to avail of the credit, you may be partially right. However, it does not mean that you will not be able to improve your creditworthiness. You can make deliberate efforts to improve your credit score and creditworthiness. This article explains strategies for removing your name from CIBIL’s defaulter list and tips for repairing your credit history.

5 steps for removing your name from CIBIL’s defaulter’s list

Here is a process to regain creditworthiness on CIBIL.

Understand the reason behind getting your name on the defaulter’s list

Firstly, you need to understand the reasons behind your name entering the defaulter’s list. This will help you to avoid committing the same mistake in future. Also, it will help you to improve your credit score and remove your name from the CIBIL’s defaulter list.

Usually, an individual or a business entity enters the default list due to a non-repayment of dues. Such non-payments can happen due to various reasons, including:

Non-wilful reasons: Sometimes the borrower is genuinely not able to make payments of dues. Such a situation may occur due to a medical emergency, loss of job, business losses, unforeseen situations, and so on. For example, many businesses had to suffer severe losses during COVID-19 induced lockdown. In such cases, borrowers can take conscious steps to get off the defaulter’s list.

Wilful reasons: A few borrowers forgo dues without paying intentionally. It depicts the creditworthiness of the borrower.

Did you know that the defaulter list is also categorised into two: wilful and non-wilful.

Analyse your credit report

It is important to obtain your credit report. The credit report includes detailed information about your credit history and can suggest the reasons behind your name being enlisted to the defaulter list. You can easily log in and obtain your credit report and ECN number from the CIBIL’s website.

Also, remember to pay off your loans. Check your credit report again to see if the score has improved.

Make timely payments of all dues

One of the key reasons behind your name is included in the defaulter’s list could be the default on previous loan repayments. Therefore, it is important to make timely payments of all your dues. If you think you will not be able to make repayments on time, you do the following:

• You may talk to your creditors and rework the repayment plan. For example, you can adjust your EMI, extend loan tenure, ask for additional time to make payments, and so on.
• As mentioned earlier, after paying off the debts, you can recheck your credit score.
• You will need to seek a no dues certificate from your bank after completing the payment.

Do not apply for multiple loans at a time

You should remember that multiple loan applications and subsequent loan rejections hamper the credit score. In order to avoid your loan applications being rejected, here is what you can do:

• Analyse the eligibility criteria of the bank or NBFC before applying. Many banks do not approve the loan applications of high-risk borrowers or applicants on the defaulter’s list. On the other hand, NBFCs are generally known for their relaxed eligibility criteria. Applying for a loan where the probabilities of it getting approved are higher, will help you in two ways – you can get a loan as well as improve your credit score.
• Also, do not apply for multiple credit cards. Credit card application rejection can also affect your credit score adversely. Instead, focus on making timely payments on your existing credit card, which can help you improve your credit score and remove your name from the defaulter’s list.

Maintain credit utilisation ratio

Th credit utilisation ratio is the ratio between credit available to you and the actual credit you are using. Using your credit utilisation ratio responsibly is important to remove your name from the CIBIL’s defaulter’s list. The credit utilisation ratiot indicates your creditworthiness and suggests that you are a responsible borrower. In order to maintain the credit utilisation ratio, you can do the following:

• Do not obtain a loan more than your needs.
• Do not exceed your credit limit.
• Avoid spending on credit cards in case your credits are already on the higher side.
• Pay your credit card bills timely.
• Make timely payments of EMIs of your loan.

Tips for repairing credit history on CIBIL

Here are a few tips for repairing your credit history.

• You need to repair your credit history, meaning you will need to optimise your credit limit.
• Do not close your credit accounts, instead, make timely repayments.
• If you are struggling to pay EMIs regularly, consider loan adjustments such as loan tenure extension, lowering the EMI, etc.
• Use your credit card diligently by making regular payments.
• Avoid having new credit accounts.
• Login to CIBIL’s website to check your credit score after regular intervals.

To sum up: Things to remember

• You will have to take conscious steps to remove your name from CIBIL’s defaulters list.
• Remember that getting off the CIBIL defaulter’s list is not a one time process but it requires continuous efforts.
• It may take a few months to get off the defaulter’s list.
• Getting off the defaulter’s list does not mean that you are creditworthy. You might be still considered a high-risk borrower depending on your CIBIL score. In such a condition, you will need to take further steps to improve your credit score.