Introduction
Missed loan payments can damage your credit. A written off in CIBILstatus makes it difficult for everyone to secure credit or a loan in the future. So, what is written off in CIBIL? Well, it means the lender could not recover.
This status damages your credit health and has a drastic impact on your future borrowing. Find out the written off meaning in CIBIL & its impact in this post.
What is Written off Status in CIBIL?
What is written off in CIBIL? A written off in CIBIL means that your lender could not recover money from you after a few months. If you miss payments for over 3 months, the lender may stop trying to collect the amount. This status does not mean the loan is forgiven. It simply marks the debt as lost. The written off meaning in CIBIL tells future lenders that your payment behaviour is unreliable. It has an impact on your credit score, too.
Written off status can be classified into two types that appear on the credit score:
1. Written off (total) indicates 100% of the amount (including the interest as well as the principal amount).
2. Written off (principal) indicates the principal amount only. The interest is still outstanding.
Calculate your CIBIL Score!
How a Written Off Status affects your Credit Score?
A written off meaning in CIBIL tag shows you did not repay your loan. This drops your CIBIL score and hurts future loan chances.
1. Drops Your Credit Score - Your score can fall by 100 to 150 points if your loan is marked written off. This tells lenders you didn't repay your dues on time and you are not a trusted borrower for future loans or credit cards.
2. A Long-Term Impact - The written off status can stay in your CIBIL report for seven years. Even after paying the dues, this can remain for 7 years, making it difficult to rebuild your score during that time.
3. Lenders Reject Your Loan Applications -Lenders often reject loan applications when they see a written off meaning in CIBILstatus. It shows them you didn't repay money in the past, and they do not feel safe to give you a loan.
4. Strict Loan Conditions -If a lender still agrees to give you a loan, they may charge high interest or ask for security. This is their way to reduce risk from someone whose report shows written off or poor payment history.
The damage from a written off status may still impact your loan chances even if you repay later.
How to remove Written off Status from your CIBIL Report?
How to clear written off in CIBIL? A written off status does not go away by itself. You must understand it step-by-step with your lender and credit bureau. Follow these actions.
1. Contact the Lender -Ask your lender how much you owe. Talk to them about a payment plan so you can pay off the full pending loan.
2. Settle the Outstanding Amount -Pay the total dues, including principal, interest or any additional charges. Do not leave any part unpaid if you want to clean your report.
3. Obtain a No Dues Certificate -Once you make the payment, ask your lender to give a letter showing that you have no pending loan amount left to repay.
4. Request Your Lender to Update Credit Report -Tell your lender to send the updated loan status to CIBIL. This can help improve your credit score after payment is confirmed.
5. Verify the Update on Your CIBIL Report - Check your credit report after a few weeks. If the written off tag stays, raise a dispute with CIBIL along with your payment proof.
How long does it take to update CIBIL Report after Rectification?
Your lender sends updates to CIBIL. This usually takes 30 to 45 days. Sometimes, it may take longer if your lender delays. Keep checking your report. If nothing changes, contact both the lender and CIBIL for follow-up.
You should check your credit after every few months to monitor your credit score accordingly.
Also Read: How to Check CIBIL Score by PAN Card?
Causes of a Written Off Status
A written off meaning in CIBILappears when your payments stop for over 3 months (sometimes lenders make it for 180 days). These are the common reasons that may result in the written off status.
1. Financial problems -Job loss, illness, or emergencies can stop you from repaying. This may result in missed payments and a loan write-off status.
2. Recovery Chance is Low -Lenders stop chasing payment if they feel there is no use trying to collect after repeated follow-ups and reminders.
3. Declared Bankruptcy -If you declare bankruptcy, the lender finds it hard to get back the loan money. The account becomes written off.
4. Borrower Passed Away -If the person dies without assets or a guarantor, the lender writes off the amount to close the account officially.
5. Fake Loan Documents -If someone uses false documents to get a loan, it becomes hard to recover the money, so the lender writes it off.
6. Lender Clears Old Records -Lenders may clean up their records by removing bad loans that cannot be recovered to maintain better books.
Learn how to remove written off status in CIBIL below.
How to Avoid a Write Off?
You know what written off means in CIBIL. Now you must learn how to avoid it. Avoiding a written off status is possible with smart choices. Now that you know how a write-off impacts your CIBIL report, here are a few simple ways to stop it from happening:
1. Check if you can pay EMIs before applying for any loan
2. Compare lenders & choose one with low rates and longer repayment
3. Read loan terms properly & check for hidden charges
4. Set a monthly budget and avoid spending more than you earn
5. Talk to your lender early if you may miss payments
Does Written off Status affect loan approval?
You know what is the meaning of written off in CIBIL report. A written off status in your credit report can lower your chances of getting approved for loans or credit cards.
1. Fewer Loan Approvals - Lenders may not trust you with new credit if you failed to repay an earlier loan.
2. Higher Interest Rates - The lender may charge more interest due to past missed payments if your loan is approved.
Credit bureaus don't keep a "defaulter list," so there's no list to be removed from.
Importance of Written Off Status
Fixing a written off meaning in CIBILhelps you get back your credit health. A clean report improves your chances of getting loans with better interest rates. It also helps you when you need money for things like school fees, home needs or medical costs. Lenders trust people who can repay past loans.
Lenders give value to responsible borrowing. Thus, your efforts to clear your old dues can help you get approved for future loans faster.
Written Off and Settled Status
The following are the differences between written off and settled status:
Parameter | Written Off | Settled |
Meaning | Indicates that the lender gave up after no payment for months and marked the loan as a loss. | The borrower and lender agreed to close the loan with less than the full amount. |
Impact on CIBIL Score | The score drops a lot and shows a poor repayment record to all lenders. | The score drops slightly less but still shows you failed to repay loans. |
Repayment Status | No payment done. The lender stopped recovery and marked it unpaid. | Some payment was made. The lender accepted a partial amount to close the account. |
Future Credit | Getting new loans becomes hard due to a poor credit report and history. | Better than written off, but still risky for most lenders. |
Solution | Pay full dues to the lender and ask them to mark the loan as "closed" in your report. | Pay an agreed amount. Ask the lender to update the report with "settled" or "closed". |
What is Settlement Status in CIBIL?
Borrowers often face unexpected problems while repaying loans. It may happen due to job loss, illness, accidents, or other sudden issues
They can then discuss new terms with the lender and agree to settle the loan if the lender allows.
Loan settlement means the borrower pays part of the loan, and the lender forgives the rest. This updates the loan status to Settled.
How Does Settled Status Affect CIBIL Score?
Most borrowers do not know how the settled status impacts the CIBIL score. Settling a loan may be beneficial in the current times, but it can ruin your credit score.
A settled status lowers your CIBIL score because it shows you didn't repay the full loan. Lenders see this as risky behaviour. Even though the loan is closed, it still affects future approvals.
This status can stay on your credit report for up to seven years. It makes it harder to get credit during that time.
How to Remove Settled Status from CIBIL?
You can remove the settled status in only one way. That is, you need to pay off the remaining amount of the loan.
After payment, ask for a No Dues Certificate that confirms you have cleared everything. Then, request the lender to update your credit report with the new status.
If the lender delays, raise a dispute on the CIBIL website with the documents. Once verified, CIBIL can update your report to show the loan as "Closed" instead of "Settled."
How to Update CIBIL Score after Settlement?
Improving your credit score after settlement takes effort.
Credit bureaus can assign a credit score upon collecting the credit details of the borrower from the lender. The score may depend on a few aspects, including:
1. Repayment history
2. Amount owed
3. Length of credit history
4. Credit mix
6. Number of loans availed
Getting a loan after settlement can be hard. However, you can get a small loan within your means & clear it off to start rebuilding your credit profile. Suppose your CIBIL credit score indicates that your debt is repaid. In that case, the lenders & banks may refuse to give you a loan. So pay off your dues to keep your CIBIL score consistent.
Conclusion
A written off meaning in CIBILcan hurt your credit and stop you from getting loans when you need them. But you can pay your dues, get your report updated, and keep good habits. Avoiding late payments helps your CIBIL score improve. You must consult your lender before selecting the settlement or defaulting on your loan.
Frequently Asked Questions (FAQs)
Q.1. Can I still get a loan if my CIBIL report shows 'Written Off'?
Getting a loan with a written off in CIBIL is quite difficult. Lenders see it as a red flag. Even if you apply, they may reject the application or ask for high interest or security. Your chances improve only after clearing all dues or updating your report.
Q.2. Can I remove the 'Written Off' status from my CIBIL report?
You can remove it by paying the full outstanding amount to the lender. After payment, ask for a No Dues Certificate. Then request the lender to update your report. You can raise a dispute with CIBIL if the lender delays. They will remove the written off label from your credit report once verified.
Q.3. Can the 'Written Off' status be removed completely from my report?
It can, but only if you repay the loan and follow the correct steps. First, clear all dues, then get a No Dues Certificate. Ask the lender to update the record with CIBIL.
Q.4. What documents are needed to fix a 'Written Off' status?
You will need the No Dues Certificate from the lender. You must keep the payment receipts and your latest credit report copy. If you file a dispute with CIBIL, these documents help as proof. Submit them through the CIBIL website or app. Always follow up until the status is corrected.
Q.5. Does my CIBIL score go up after closing a loan?
Closing an instant personal loan improves your CIBIL score. It shows you repaid your dues. But if the loan was written off or settled, the effect is smaller. Still, a closed loan adds a positive record. Keep paying on time and reduce your credit usage to grow your score further.
Q.6. How can I change the status from 'Settled' to 'Closed'?
Repay the remaining amount that was waived earlier to change the loan status from settled to closed. Ask your lender for a No Dues Certificate after full payment. Then request them to update the loan as "Closed" in your report.
