I have a credit card written off status on my cibil . This is about 2 lakhs on 2 credit card. I made last payment in 2019 and was unable to make payments later as I lost my job.Now i have stable job and can pay off 2 lkahs, My worry is will the bank take 2 laksh or add interest on that and ask me to pay 8 or 10 lakhs for this ? can anyone advice if this situation is similar and have you heard about any solutions . I can make payment of 2 lakhs outstandng as reflecting in my cibil report

Ans: You have an outstanding credit card debt that hasn't been cleared for three years. This has negatively impacted your CIBIL score, and you are concerned about how clearing the debt might affect your score.

Impact of Clearing the Outstanding Amount on CIBIL Score
Positive Impact: Clearing the outstanding amount will positively impact your CIBIL score over time. Your credit score improves when you settle debts, demonstrating responsible financial behavior to lenders.

Time Frame for Improvement: While clearing the debt will help, it may take a few months for your CIBIL score to reflect the improvement. Consistent, timely payments in the future will further boost your score.

Steps to Close the Credit Card Without Further Impact on CIBIL Score
Negotiate a Settlement: Contact the bank and negotiate a settlement for a lower amount. Ensure that the settlement is reported as "Paid in Full" rather than "Settled," as "Settled" can negatively affect your CIBIL score.

Full Payment: If possible, pay the full outstanding amount. This will ensure the account is closed cleanly and positively influence your CIBIL score.

Obtain a No Dues Certificate: After clearing the outstanding amount, request a No Dues Certificate from the bank. This document serves as proof that your account is fully settled.

Check Your CIBIL Report: After settling the debt, regularly check your CIBIL report to ensure the payment is reflected correctly. If there are discrepancies, raise a dispute with CIBIL.

Maintaining and Improving Your CIBIL Score
Timely Payments: Make sure to pay all future credit card bills and loan EMIs on time. This is crucial for maintaining and improving your CIBIL score.

Limit Credit Utilization: Keep your credit card utilization below 30% of the credit limit. High utilization can negatively affect your score.

Diversify Credit: Having a mix of secured (like home loans) and unsecured credit (like credit cards) can positively impact your score.

Monitor Your Credit: Regularly monitor your CIBIL score and report. This will help you stay informed about your credit health and take corrective measures if necessary.

Final Insights
Clearing your outstanding credit card debt is the first step towards improving your CIBIL score. While it might take some time for your score to reflect this improvement, consistent and responsible financial behavior will ensure a positive impact. Negotiating a settlement or paying the full amount, obtaining a No Dues Certificate, and monitoring your CIBIL report are key steps to closing the credit card account without further negative impact.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Partial settlement of overdue loans may affect cibil credit score.

But you may seek NOC from lender and submit it to Cibil.

Also if lender endorses the resolution plan of your loan and informs it to Cibil, it may help avoid the settlement status in your cibil record.

Best wishes;

Ans: Since your CIBIL score is now a strong 765, it reflects a solid recovery despite past issues. However, to further improve it, focus on maintaining a perfect repayment history for all current credit. Avoid closing old accounts with good history, as they contribute positively. Regularly monitor your CIBIL report to ensure no errors. Over time, consistent and responsible credit behavior will enhance your score further.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You showed courage by settling the dues.
You faced the issue directly.
Many people avoid such closure.
That itself is a strong positive sign.
You did the right thing, even late.
Your future credit life is not finished.

» Understanding What Actually Happened
– You took a credit card very young.
– You had no financial training then.
– Spending happened emotionally.
– Income stopped suddenly due to job loss.
– Covid disrupted many young careers.

– Missing payments started unintentionally.
– Contact details changed due to phone loss.
– Communication gap increased the damage.

– Interest kept compounding silently.
– Penalties kept adding monthly.
– Recovery process triggered later.

– This pattern is common.
– It is not unique to you.

» About the High Outstanding Amount
– Credit cards have very high interest.
– Interest compounds monthly.
– Late fees keep adding.
– GST applies on interest too.

– Once default crosses 90 days, risk increases.
– After many months, amount balloons.

– The Rs 3.15 lakh demand looks shocking.
– But it follows card rules.
– It is legally enforceable.

– Negotiation saved you money.

» Your Settlement Decision Evaluation
– You did not run away.
– You did not argue emotionally.
– You negotiated calmly.

– You reduced liability significantly.
– You paid around double the usage.
– This is normal in settlements.

– You paid on promised dates.
– You honoured the plan fully.

– You collected No Dues letter.
– This step is very important.

» Status Showing as Closed
– Closed status is a relief.
– It means no active liability exists.
– The account will not reopen.

– No recovery calls will come.
– Legal risk is gone.

– This is closure, not erasure.

» Why CIBIL Score Is Still Low
– CIBIL tracks repayment behaviour.
– It records payment delays.
– It records defaults.

– Your card had long non-payment.
– This created negative history.

– Even after closure, history remains.
– It remains for several years.

– Closure does not reset score instantly.

» Why Experian Score Is Higher
– Each bureau has its own algorithm.
– Each bureau weighs data differently.

– Lenders report data unevenly.
– Some report monthly.
– Some report quarterly.

– Experian may have less severe tagging.
– CIBIL is widely used by banks.

– Both scores are valid.
– Lenders prefer CIBIL usually.

» Which Score Matters More
– In India, CIBIL dominates lending.
– Banks check CIBIL first.

– NBFCs may check others.
– Digital lenders may use Experian.

– Focus should be on CIBIL improvement.

» Can You Get Loans in Future
– Yes, loans are possible later.
– Not immediately large loans.

– Small credit comes first.
– Trust builds slowly.

– Time heals credit damage.

» Key Factors That Will Improve Your Score
– Payment consistency going forward.
– Low credit utilisation.
– No new defaults.
– Time gap since settlement.

– Behaviour matters more than history now.

» What You Should NOT Do Now
– Do not apply for many loans.
– Do not apply for many cards.

– Each rejection hurts score.

– Do not take instant app loans.
– They report aggressively.

– Do not close future cards early.

» First Step to Rebuild Credit
– You need fresh positive history.
– One clean account helps.

– Start small.
– Think long-term.

» Secured Credit Is Best Initially
– Secured credit has lower risk.
– Lenders trust it more.

– This helps rebuild confidence.

– Use only what you can repay.

» How to Use Credit Card Properly Next Time
– Spend less than 30 percent limit.
– Pay full bill every month.

– Never pay MAD only.
– MAD is dangerous.

– Set auto-debit.
– Avoid manual delays.

» Payment Behaviour Matters Most
– One late payment hurts badly.
– Consistency matters more than amount.

– Small spends with perfect repayment help.

» Timeline for Score Improvement
– First six months show slow change.
– One year shows visible improvement.

– Two years shows strong recovery.

– Settlement impact fades with time.

» About “Settled” Versus “Closed”
– Settled status hurts more.
– Closed after payment is better.

– You have “Closed”.
– This is positive.

– Keep the No Dues letter safely.

» What If CIBIL Shows “Settled” Later
– Raise dispute immediately.
– Upload No Dues proof.

– Follow up until correction.

» Credit Mix and Its Role
– Single credit line is thin history.
– Mix improves score gradually.

– Add only when ready.

» Income Stability Is Critical
– Lenders look at income too.
– Stable job helps approvals.

– Credit score alone is not enough.

» Your Age Is a Big Advantage
– You are still very young.
– You have decades ahead.

– Early mistake does not define life.

» Psychological Side of Credit Damage
– Shame often delays action.
– Fear blocks learning.

– You faced reality bravely.
– That mindset ensures recovery.

» Learning from This Experience
– Credit is not free money.
– Interest can destroy finances.

– Emergency fund matters.
– Insurance matters.

– Lifestyle must match income.

» Discipline Beats Intelligence in Credit
– Smart people also default sometimes.
– Discipline prevents repetition.

– Systems beat willpower.

» Automate Everything Possible
– Auto-pay credit bills.
– Auto-track due dates.

– Reduce decision fatigue.

» Keep Credit Utilisation Low
– High usage signals risk.
– Low usage signals control.

– Even zero balance helps.

» Avoid Co-Signing Loans
– Never guarantee others’ loans.
– Their default hurts you.

» How Lenders Will View You Now
– Past default is visible.
– Closure shows responsibility.

– Time since default matters.

– Behaviour going forward dominates.

» Difference Between Credit Score and Credit Worthiness
– Score is only one input.
– Income and stability matter.

– Employer profile matters.
– Existing liabilities matter.

» If You Need Loan Urgently Later
– Expect higher interest initially.
– Accept small ticket size.

– Use it to build record.

» Avoid Credit Repair Scams
– No one can erase history.
– Paid services mostly fail.

– Time and discipline work best.

» Regular Monitoring Is Important
– Check reports quarterly.
– Look for errors.

– Dispute any wrong entry.

» Emotional Closure Is Also Needed
– Forgive your younger self.
– You did what you knew then.

– Growth comes from mistakes.

» Finally
– Your credit life is not over.
– Your score will improve steadily.

– You already completed the hardest step.
– Closure required courage.

– Now focus on clean behaviour.
– Patience will reward you.

– You can definitely get loans again.
– Just not immediately large ones.

– Stay consistent.
– Stay disciplined.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment