Monday, 7 September 2015

Does loan history affect my CIBIL score?

Your credit history plays a significant role in determining whether a lender will extend credit and the interest rate that the loan would be approved at. Before you apply for a loan, it would be prudent to check your credit history, in order to ensure that not only is your cibil report accurate, but also updated.

Previous history, including information such as past loans taken and their duration, your repayment track record, delayed payments or defaults (if any) will be reviewed carefully by a prospective lender. The amount of debt you owe by way of any outstanding loan accounts will also influence your score. Simply put, any negative records, such as even one loan default can cause damage to your credit score.

However, it is interesting to note that having late payments or written-off loans on your credit report are not the only factors that indicate credit risk and may negatively affect your score.
With no loans on your account, it means that you have no previous history to show. For a financial institution, since the credit report is the first piece of information about a customer, little or no recent, active credit history can also prove detrimental. This is because with no history, there may not be sufficient information on which to base a lending decision.

How do you correct this situation?

Even a small loan can help you get started! Apply for a credit card, and use it judiciously. This will help you establish credit history. A positive payment track record is the first step towards qualifying for any loan or card account in the future. Remember, higher the score, higher are the chances of your loan or credit card application getting approved.

However, if you have any loan or credit card payment outstanding on your account, it would be a good idea to start paying off those dues, slowly but surely. This can be done with the help of prudent credit counselling, if the task seems daunting at first.

If you think that any details on your report are incorrect, it is always possible to contact the credit bureau and raise a CIBIL ‘dispute’. The bureau in turn will pass on your query to the concerned financial institution and have it reviewed. If indeed erroneous and rectified, the updated information will reflect on your credit report, immediately boosting your score as well. Hence, how to clear CIBIL issues is something that can be tackled with time and patience.


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  2. some years ago i got loan from city finance that time i have setlnment but i apply for personal loan this time all bank are rejected so help me this problem

  3. Dear Mr Panchal,

    Settlement is a negative flag and it shows an incapability of making payment which is why your Personal loan enquiry gets rejected. Would advise you to contact citifinance again and make the necessary payment. They will then issue you a NOC letter which will show that you have made the complete payment and account will get closed properly.

    We can arrange a call back for you and take you through the process and will also help you improving your score and make you eligible for a loan.