CIBIL Score After Loan Settlement – How to Improve It?
Introduction Settling a loan can provide relief from financial distress, but it can also negatively impact your CIBIL score. A lower credit score can make it challenging to secure loans in the future. This guide explains how to rebuild your credit score post-settlement and regain financial credibility.
Understanding CIBIL Score Impact After Loan Settlement
When you settle a loan, the lender marks your account as “settled” instead of “closed.” This status indicates that you haven’t repaid the full loan amount, which negatively affects your CIBIL score. Consequently, lenders may consider you a high-risk borrower, making it difficult to get new credit.
Steps to Improve Your CIBIL Score After Loan Settlement
1. Check Your Credit Report Regularly
- Obtain a copy of your CIBIL report from www.cibil.com.
- Identify and dispute any errors or discrepancies.
- Ensure your settled loans are accurately recorded.
2. Pay Outstanding Dues on Time
- Always pay your credit card bills and EMIs before the due date.
- Avoid late payments to gradually rebuild your score.
3. Use a Secured Credit Card
- Apply for a secured credit card against a fixed deposit (FD).
- Use it responsibly and pay the full balance each month.
4. Maintain a Low Credit Utilization Ratio
- Keep your credit utilization below 30% of your credit limit.
- Lower utilization indicates responsible credit behavior.
