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CIBIL Written Off: Meaning, Status and How to Change It

CIBIL Written Off: Meaning, Status and How to Change It

Loans play a considerable role in people’s financial lives and are often used to meet major expenses like buying a house, funding education, starting a business, and more. How can borrowers ensure they can access funding from lenders when needed? 

This is where your credit score comes in. A credit score is a number that indicates how likely a person is to pay back a loan and is based on their previous financial and loan repayment history. A higher credit score indicates a better chance of getting loan requests approved and with better terms. 

The oldest and most popular credit score in India is the TransUnion CIBIL score. This is a three-digit number with a credit score range between 300 and 900. Anything above 700 is considered to be a good credit score, reflecting the borrower’s repayment capacity and creditworthiness. When checking your CIBIL credit score, you may come across a portion that says “written off” in your CIBIL report. 

This can negatively impact credit scores and hamper your ability to avail yourself of loans. However, a CIBIL write-off can be removed from your report. In this article, we will explore written off meaning in loan and how you can change it.

Written Off Meaning in CIBIL: What Does It Indicate?

What is written off in CIBIL report? Written off meaning in loan indicates that the borrower has failed to make payments against their outstanding loan for over three months. When an individual cannot repay their loan, the lender can “write off” the borrowed funds. This status on a CIBIL report can adversely affect an individual’s eligibility for loans in the future. 

Lenders often check a person’s credit history when lending. When they come across a CIBIL written off, it indicates that the borrower has been unable to make repayments against their loans and makes them a defaulter candidate. Additionally, it can severely impact the borrower’s credit score and cause it to drop below the desired level.

What Causes a Loan or Credit Card to be Written Off in CIBIL?

Once you understand what is written off in CIBIL and its causes, you can take necessary steps to avoid it. Various reasons due to which your loan or credit card might get written off in CIBIL report include:

  • Repeatedly missing monthly instalment payments. 
  • Ignoring repayment reminders that your lenders send you.
  • Not settling payments against outstanding loans or credit card dues for more than 3 months.
  • Removal of bad loans by lenders from their active books for accounting purposes while the debt remains legally owed.

How to Remove Written-Off Status from CIBIL?

When reviewing your CIBIL report, it is essential to examine each aspect carefully. Incorrect information can often lead to a status of “written off” in CIBIL reports, and closed accounts may also be mistakenly marked as “written off”.” 

Once you have determined that no errors have been made, you must contact your lender to start removing a “written off” status. CIBIL cannot make the change independently, so contacting lenders is the first and most crucial step. You can then proceed with the following steps to remove a written-off status on your CIBIL report: 

1. Contact the lender

Start by contacting the lender from whom you borrowed the loan and get the exact amount you owe them. 

2. Negotiate a repayment plan

Once you have reached out, discuss how the outstanding amount can be repaid.  You can also negotiate a repayment plan that suits you and the lender. Make sure to settle the total amount. 

3. Get a “No Dues Certificate”

After the loan has been settled in full, you can request a “No Dues Certificate” from the lender. This is a formal document stating that all dues have been cleared. 

4. Inform the credit bureau

The lender should then update the credit bureau with the new loan status.

5. Raise a dispute

If the lender delays or fails to update the credit bureau, you can directly contact them and dispute the write-off on your report. 

6. Provide the necessary documents and follow up 

You must show supporting documents (such as the “No Dues Certificate”) when raising a dispute. Keep following up with the bureau until the written-off status is removed from your CIBIL report. 

How Long Does the Written Off Status Stay on Your CIBIL Report?

The status of written-off in CIBIL report remains for up to seven years from the date of reporting, even if you repay the outstanding dues during this period. This extended duration significantly impacts your financial credibility and borrowing capacity.

During this time, lenders will continue to see this negative mark whenever they review your credit report for loan or credit card applications.

Even after you repay the full outstanding amount and obtain a No Dues Certificate from your lender, the account may be marked as ‘settled’ rather than ‘closed,’ which still indicates incomplete repayment.

But the good thing is that the impact diminishes over time, especially when you demonstrate responsible credit behaviour by making timely payments on other loans or credit cards.

How to Avoid Written-Off Status in CIBIL Report?

Getting a CIBIL write-off removed can be a challenging and lengthy process. Rebuilding your credit score can also become difficult. To avoid these problems, there are specific steps an individual can take to prevent a write-off in the first place. This includes: 

– Assess your ability to repay monthly loan instalments before applying to lenders. 

– Research different loan options to find the one best suited to your needs. It is easier to apply for and repay loans that have low interest rates and longer repayment tenures. 

– After applying, make sure to carefully read loan agreements. This can indicate if the lender has any hidden charges or fees that may increase your repayment amount. 

– Budget your expenses every month and try not to exceed it. 

– Create a budget and stick to it to control any unnecessary expenses. 

– In case there is a risk of defaulting on your loan, contact your lender as soon as possible. This can help you uncover solutions that are beneficial to the borrower and lender. 

How to Improve Your Credit Score After a Write-Off? 

Late loan payments, settled dues, and “written off” statuses can negatively impact your credit score, making it difficult to avail of loans and other financial necessities in the future. However, individuals can take certain steps to rebuild their credit scores, whether that is a CIBIL rating, Experian credit score, or others. 

Credit bureaus typically assign credit scores after collecting information about borrowers from the relevant financial institutions or lenders. The parameters that affect your credit score include loan repayment history, the amount owed, credit utilization ratio, the number of loans availed, and the length of your credit history. 

Making regular full repayments on your credit card, taking out and paying back small loans in full, ensuring your credit utilization ratio is low, and maintaining your repayment history can help rebuild your credit score. 

List of Common Errors That Can Lead to a Wrong Written Off Status

Here are some common errors that can lead to the status of written off in CIBIL report:

  • Incorrect Personal Information: Errors in name, address, age, date of birth, and PAN details.
  • Closed Account Marked as Written-Off: A closed account incorrectly labeled as written-off by the lender.
  • Delay in Balance Updates: Cleared dues not updated on the CIBIL report.
  • Incorrect Days Past Due (DPD): Wrong DPD suggesting delayed payments when payments were made on time.

Conclusion

CIBIL ratings are crucial in determining an individual’s ability to avail of loans, funding, credit cards, and more. While unforeseen circumstances can negatively impact credit scores, it is important to remember that the score can always be rebuilt. 

Are you looking to meet your financial goals, improve your credit score, or obtain loans to meet your requirements? The right guidance can help ensure that you do not face unnecessary challenges like CIBIL write-offs along the way. Tata Capital can offer expert guidance, ensuring you achieve your personal and financial goals.

FAQs

What is written off in CIBIL report?

 

Written off meaning in loan indicates the borrower has failed to settle outstanding loan or credit card dues for over three months. The lender removes the amount from their books as an asset and reports it to CIBIL.

Is it possible to remove written off status from CIBIL?

 

Yes, it’s possible. You can clear the outstanding amount by reaching a settlement with the lender, obtain a No Dues Certificate, and then ask for the credit report to be updated accordingly.

How long does written off stay in CIBIL report?

 

The written-off status remains on your CIBIL report for up to 7 years from the date of reporting. However, the negative impact on your creditworthiness reduces, particularly when you show responsible credit behaviour.

Difference between written off and settled in CIBIL?

 

In CIBIL, “settled” means partial repayment by the borrower upon agreement with the lender, while written off meaning in loan means the lender closed the loan due to non-payment.

Can a written off loan affect my future loan eligibility?

 

Yes, written-off in CIBIL remains on your credit report for 7 years. It negatively impacts your credit score, signals high risk to lenders, and reduces your chances of getting future loans.

How should I dispute a wrong written off entry?

 

To dispute a wrong written off entry, raise a dispute on the CIBIL portal, submit supporting documents proving timely repayment. Additionally, follow up with both the lender and CIBIL until the incorrect written-off status is corrected.

How soon will my CIBIL score recover after paying a written off loan?

 

Paying or settling a written-off account does not erase it from your CIBIL report immediately. The status changes to “settled” and continues to appear on your credit history for up to seven years.

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