So I got a credit card in 2019 at the age of 22 with a limit of 70000 from Hdfc and I spent nearly 62000 recklessly in the first 5 months. I paid the MAD due for 2 months and after that I stopped paying as I was terminated from my job and I came back to my hometown, I lost my phone so changed my number and received no calls or emails regarding for payment of dues but I knew they will call me and make me repay, that day came on Oct 2024 a recovery agent called me and said I gotta pay 315000 to close my account, i panicked and said it is a huge amount cause I used only 65k and it is nearly 450% more than my borrowed amount. The agent said don't worry we will close to your account but you gotta pay 138500 and i agreed, I asked for installments to pay which he agreed and gave me this plan Nov 23rd- 50000 Dec 23rd- 50000 Jan 23rd - 25000 Feb 10th- 13500 I paid the above installments on date and closed my account that day also got a no dues letter. I checked my CIBIL and it was reflecting as hdfc card- Closed. Now my CIBIL score is 675 and I want to know how can I improve my score and can I get loans in the future. Little credit info about me I have only one credit history which was with hdfc and no other credit cards or personal loan in my name. Also my Experian credit score is 795, why is my CIBIL and Experian different.

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