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How to Protect Your Name from Cibil Defaulter List?

  Wed, Jun 21, 2017     written by : CSF-Team
Bad Debts

The first thing to understand about CIBIL loan defaulter list is that it doesn't exist. Yes, you read it right. There is no such thing as CIBIL defaulter list. However, does this mean that you needn't worry about loan defaulting? Absolutely not. Loan defaulters exist, and they also have to face serious repercussions.

If you want to improve your credit health then you must take all the measures to ensure you don't default on a loan. But what constitutes as loan defaulting really?

Default and Defaulter

To default is to fail repaying a debt such as a loan or credit card bills when due. In other words, if you are unable to repay a loan and missed several EMIs then you could "default" and deemed as "defaulter".

What Leads to Defaulting?

The most common reason for someone to default is their inability to repay a debt, as mentioned above. However, there are some other ways a person can default as well. These are:

Discrepancies in Credit Report

Have you ever checked your CIBIL report? If your answer is "no" then you must do it today itself. Discrepancies and mistakes in credit reports often lead to a low CIBIL score or even defaulting.

Even if you are paying credit card bills and loan EMIs on time, you can be considered a defaulter if your credit report tells another story.

Sometimes, a bank may send erroneous data to CIBIL which is then put on a person's credit report. So, you may be paying credit card bills in full, but if your bank mistakenly reports that you have pending debt, it may result in defaulting.

Identity Theft

Identity theft may have a benign ring to it but in reality, it's far from it. A person can get their hands on your credit card information through phishing scams, etc. and then make multiple purchases using the same. Not only this could result in a huge financial loss but also make you a defaulter, albeit wrongly so.

How to Prevent Defaulting?

There are many things that you can do to minimize the risk of being included on a bank's loan defaulters list. While these may require a lot of effort from your end, it's absolutely worth it given how serious the repercussions of defaulting could be.

Let's get started.

1. Credit Report Monitoring

This is something you simply can't afford to ignore if you don't want to default. By checking your credit report at least once every few months, if not every month, you can easily stay up to date with your credit rating. Thus, if you notice that you are losing points, you can take an immediate action and make recovery, thereby preventing a possible instance of defaulting.

Monitoring your credit report also helps you identify identity thefts. So, if you notice unfamiliar transactions in your report you can contact your bank and prevent a financial disaster from taking place.

2. Keeping it Simple

Do you have multiple credit cards? Do you like to use your credit cards a lot? If your answer to any of these questions is "yes" then you must revaluate your situation. High credit utilization is not only detrimental to your credit score, but also increases the chances of defaulting.

Using credit cards is good, and in fact it often helps to build credit score, but you must use only as many as you can manage. It's best if you can stick to just one. Even in that case, be sure to use less than 30% of the credit limit.

3. Importance of Discipline

One of the major differences between a person who defaults and a person who doesn't is that one of these is disciplined.

Making your EMI payments and credit card payments always on time is the key to improving a credit rating. Moreover, you get to control your expenses and minimize debt this way, which makes your life less stressful.

Your credit score is extremely important and can also help you assess how close or far you are from defaulting. So, get your free CIBIL report today itself, and see if you could improve it. Feel free to rope in a professional if needed.