Loan rejected despite a good CIBIL TransUnion Score? Check your CIBIL report again!

If you have ever been baffled by rejection of your loan application even though your CIBIL report has boasted of a high TransUnion Score, then you must read this! Here’s why you must go back and check your CIBIL report thoroughly.

“An individual’s CIBIL Report shows past 36 months of credit history. The CIBIL TransUnion Score although is calculated based on 24 months of credit history,” says Harshala Chandorkar, senior vice-president of consumer services at CIBIL.

She adds that if an individual’s credit report is based on his credit history of 36 months and if it reflects the status as ‘settled’ against any of his previous accounts during any point at that time, it impacts the applicant’s credit history.

“Even though an individual may have a high CIBIL TransUnion Score owing to good and timely credit payment behavior in the past 24 months, his loan application gets evaluated based on his overall credit history as reflected in the report,” she explains.

However, the good news is that a ‘settled’ status may not necessarily have an adverse impact on the individual’s loan application. Chandorkar noted that each bank has its own policy to view ‘settled’ status in a CIBIL report.

“However if the customer has fully paid the dues and the loan provider has closed this account then the status should reflect as "Closed" in the customer’s credit report,” she notes.

So in such a scenario, what should one do? Harshala Chandorkar tells us that an applicant must follow close that account in order to get his CIBIL report in order.

“A “Settled” status on the credit report cannot be changed unless the customer pays back all the dues and the loan or credit card is closed. Hence, it is advisable to approach the bank or the credit card company and offer to fully pay all the accrued dues and penalties if any and close the credit card or loan,” suggests Chandorkar.

Once, the above mentioned steps are followed and the dues are paid in full, the status changes from ‘settled’ to ‘closed’. The lending institution updates your data, which is then reflected in your CIBIL report.

So, if you plan to apply for a loan, make sure you go through CIBIL report well and get everything in order to get the best deal!