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What your Bank will not tell you about Loan Settlement ? It hurts your Credit Score !
March 14, 2012 55 comments 26Share
Over 88% of new home loan borrowers in 2011 had a CIBIL score of 750 and above. Do you have a score of 750+ or not ?
So now by default if your CIBIL Score is less than 750, you stand a very low chance of getting any kind of loan to be approved. Most probably your loan application will be rejected. However, today we are going to talk about Settlement aspect of Loans. Lets see more! CIBIL has really made life worse for a lot of people. A lot of people have misused their credit cards or other kind of loans , on top of it outstanding loans piled up so much over time, that they could not pay it off completely. Banks suddenly told them- Hey, Dont worry if you cant pay off your Rs 3 lac outstanding loan, just go for settlement and all you need to pay Rs 60,000. We will send you NOC letter after that. Are you one of those who went for Loan settlement months or years back ?
3/21/2012 2:42 PM
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you took loan, happily used it, ballooned it with late charges/interest by not paying on time and finally bank in frustration said - Fine Lets take whatever we can get out of this guy, if we dont get some part right now, we will not get even a penny later. Mak was worried why his name is appearing on CIBIL report as settled and his loan application was rejected. I want to remove my name from Cibil report, I Used to have 2 CC, from HDFC & another from citi bank, I do had personal loan from citi finance, which I settled long 2yrs back for which I have settlement letter as well. Recently when I applied for a Bajaj finance loan for home electronic, It got declined, reason given to me was as my name reflected as a defaulter of Cibil. Please advice me to clear of my name from Cibil. What Mak has to understand is that Settlement is a negative thing, and banks will report this incident to CIBIL and mind you, your status will be marked as Settled for next 7 yrs. So forget about getting any kind of loan from any bank for next 7 yrs at least. Once 7 years passes, then the SETTLED status will be removed , however your credit score by that time will be so low , that you will not get any loan even after that point, unless you work on improving your credit score. Now if your score is low at that point, it will again be very difficult for you to get any kind of loan (because of low score). So ultimately, the final conclusion here is that once you settle your loan, it becomes very very negative thing for you and your future and over the years it will not let you get any kind of loan unless you pay off each and every paisa of your loan.
Conclusion
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3/21/2012 2:42 PM
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If you have settled your loan earlier, first check your credit report and see what is your score. If its low (lower than 750) , you will seriously face getting any kind of loan in future, So the only solution is to pay off the loan outstanding. Talk to your bank and pay it off. This will still not improve your score immediately, over next 1-2 yrs , make sure you pay your existing loan/credit card on time and dont mis-use your credit capability. Your score will improve over time.
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