At Credit Sudhaar for over last 5 years, we have helped innumerable individuals who were just stuck with bad credit. And today we share the reasons on why the people got fixated and continued to live with derogatory credit profile.
There are majorly following two reasons on account of which the CIBIL rating of an individual takes a nosedive.
Unfortunately, both the above reasons have made people get stuck with bad credit for years and the major reason why they have continued to be in such a situation has been on account of unawareness.
Many people go through financial crisis. And the first impact of any such crisis is on the repayment of the loans. Majority of individuals who after successfully coming out of crisis tried to pay up ended in settling the account rather than closing it. Unfortunately, they have been under the impression that the account has been paid as the collection calls stopped post their payment to the bank. They even received a letter stating that the outstanding has been zeroed. Neither the bank tried to explain nor the customer had slightest of idea that the settlement would continue to negatively impact the credit score.
All those who have undergone a tough financial time and have failed to regularly repay the loan obligations, need to understand that they are obliged to pay back completely to the bank. Settlement is a derogatory status and in the event of this reflecting on the bureau report, it will continue to impact the credit profile severely.
This has been the biggest challenge for all those who have had impaired credit history. Even when they got to know that they need to work, how to begin the task was something not known to them. Hence they just continued to be stuck with the issue of derogatory status.
As the awareness on importance of credit score grew, people have been obtaining their credit bureau reports. And now with the Reserve Bank mandating the bureaus to extend a free report every year, the same is being accessed by a large number of individuals. However, getting to understand what does that report mean to them and what are the actual implications of various statuses, in combination, on their credit score is something that none of them could make out. This also led to them not being able to make any progress on how to work on the improvement of credit scores.
When in need, one would want to try out all possible avenues. And when these individuals with damaged credit profile were in need of any funds, they approached the banks. However, on account of the repayment history got denied on the loan request. When denied from one lending institution, they tried with the other and continued to do so even after regular denials from various banks and lenders. They did not know that more they applied, the more it hurt their endeavor to have access to loans or any other form of credit. This only pushed them deeper into the issue and further depleted already hurt credit score.
The best way to as we advise to people is not to keep looking out for personal loan without CIBIL score but to work towards improvement of credit profile through resolution and focused approach. Seeking credit advice from a professional will only help in attaining the goal faster and getting to have a better understanding on this important aspect of financial life.