Don’t get into CIBIL’s bad books

Have you been slacking on timely repayment of loans and clearance of credit card bills? Then this bit of news is just for you. Taking monthly loan repayments for granted and going in for settlement of loan accounts and credit cards at a much lower amount than the total outstanding bill is a bad debt habit that many young professionals have developed. What many don’t realise, however, is that this might go against them in the long run, thus leading to more debt woes.
Every time you make a wrong financial move, it gets recorded in your credit history, which is maintained by the Credit Information Bureau India Limited (CIBIL). And if you are not on your guard, it’s pretty easy to fall into the bad credit history trap set by loan recovery agents hired by banks.
“In this age of recession and loan defaulters, banks are keen on recovering whatever they can from customers who owe them money,” explains an employee of HSBC bank, on condition of anonymity.
“They hire collection executives, who get commission for every pending bill amount they recover from customers. Often, in order to make a quick buck, these agents lure customers with attractive schemes that promise to settle or close the loan or credit card account at a much lesser price than the total outstanding bill. There is a catch here though, that they obviously do not alert customers about CIBIL,” she adds.
While your bank might close your loan and reach a settlement, you will be blacklisted by CIBIL — a body that tracks your financial history. Any credit card or loan that you close at an amount lesser than the original pending one, reflects on your credit history with CIBIL. This will go against you in the future, as banks verify a customer’s track record with CIBIL before sanctioning any loan.
To avoid any hindrance to your future loan applications, CIBIL advocates good money management practises by making repayments to banks on time.