What does 'written off' mean in your CIBIL report and how it affects your credit score?

Getting a credit card, a loan, and even some houses will be affected based on your credit history; in other words, credit history is a huge component of your financial life. The CIBIL score reflects your creditworthiness with a number. Having a "written off" status may make all the difference between many doors opening in your future and few of them.

What is CIBIL report?

The credit history will be listed in a comprehensive report done by CIBIL; this is kept updated by Credit Information Bureau (India) Limited-CIBIL and contains loans, credit card information with their respective payback or default history details. Hence, it will play a part in determining the lenders' decision towards accepting any of your applications for credit.

What is credit history?

A credit history is a detailed report of all your borrowing and payment habits. Starting from electricity bills to credit cards and personal loans, it covers all these. Lenders calculate how reliable you are as a borrower by analysing your credit score, which is based on your credit history whenever you apply for credit.

What does “written off” in CIBIL report mean?

In case your loan has "written off" status in your CIBIL report, it generally means that the lender thinks that such loan is completely unrecoverable after there has been no payment at all from your side for a set time frame, say three months or more. Your creditworthiness suffers terribly as potential lenders would consider you to be a hazardous borrower. Because it means you haven't been reliable regarding paying back obligations, it can hurt your chances to obtain credit in the long run.

Common CIBIL report errors

The following are some frequent mistakes that can be found in your CIBIL report.

• Incorrect personal information: There can be inaccuracies associated with your report, such as an incorrectly spelled name or an incorrect address. It is important to verify the accuracy of this information.
• Incorrect balance information: Your credit score will suffer if your report does not provide a correct updated outstanding balance sometimes. This figure should correlate with your actual balance at all times.
• Multiple accounts: There could be multiple accounts under your name, and you might not be aware of them. Report this to the authorities right now if you see it.

How to resolve the “written-off” status in CIBIL report?

Here's what to do if a "written off" status appears in your CIBIL report:

1. Determine the problem: Examine your CIBIL record carefully to find any loans that have been written off. The lender has determined that these loans are unrecoverable.
2. Speak with your lender: Contact the lender to address any errors, such as an account that has been inadvertently marked as written off.
3. Pay off the outstanding amount: There can be no payment of even part of the amount due but once you pay off the rest of the amount, they will lift the "written off" status, as it is a statutory and regulatory requirement.
4. Request a no dues certificate: Once done, request a no dues certificate from the lender. The letter serves as a testament of complete settlement of your loan obligation.
5. Update your CIBIL report: Request the lender to update this information in CIBIL when you get the no dues certificate. This will ensure that the settlement reflects on your credit report as soon as possible.

In conclusion, if the status for your loan is "written off" on your CIBIL report, then it means that the lender has formally declared your debt uncollectible. Even if paying off the debt could fix the problem, your creditworthiness may be negatively impacted for some time. This will further make it harder to rent a house, lower your chances of getting credit, and drop your CIBIL score.