Personal Loan Application rejected – How to improve CIBIL Score ?

POSTED BY vimalpfizer ON July 20, 2014 10:35 pm COMMENTS (5)

Dear Manish,

Recently I pulled out my CIBIL report as my personal loan application was rejected and I was told that  my score is 566. I observed followings in my report

a. Three W/O from Phoenix ( I was having two ABN AMRO bank credit card and due to dispute with the bank I had not paid them)

b. One fully paid personal loan

c. Running car loan from SBI from last 15 months with 000 DPD.

d. One running credit card from HDFC since 2004, without any default and 000 DPD.

e. two credit cards without any due/overdue with I had closed long back, with credit limit of 100,000 each.

Please advice

a. If I make 100% payments of phoenix (they claim that ABN was sold to RBS and RBS sold all these assets to Phoenix and Kotak guy has talked to me) one after the other, by how many points I stand to gain.  Infact I was offered by their collection guy that if I pay 50% of the amount, he will issue a settlement letter and a NDC. Wht is it and does it help at all?

b. If I raise a dispute with SBI and HDFC thru CIBIL for removal of non existing credit cards, will it also improve the score?

c. I am 49 now and need to go for housing loan, how soon can I move ahead.


5 replies on this article “Personal Loan Application rejected – How to improve CIBIL Score ?”

  1. Credexpert says:

    Dear Mr. Vimal,

    Your CIBIL credit score depends on 4 factors which are:

    1. Payment history
    Making late payments or defaulting your EMIs or dues (recently or consistently) shows you are having trouble to pay your existing credit obligations and will negatively affect your score.

    2. High utilization of Credit Limit
    While increased spending on your credit card will not necessarily affect your score in a negative manner, an increase in the current balance of your credit card indicates an increased repayment burden and may negatively affect your score.

    3. Higher percentage of credit cards or personal loans (also known as unsecured loan)
    Having a balanced mix between the secured loans (such as Auto, Home loan) and unsecured loan (such as Personal loan, Credit Card) is likely to have a more positive affect on your score.

    4. Many new accounts opened recently
    If you have recently been sanctioned multiple loans and credit cards, then lenders will view your application with caution because this behavior indicates your debt burden has increased increase, which will negatively impact your score.

    The above mentioned points are taken into consideration while calculating the credit score. Improving the credit score is a process and therefore it does take time to increase or decrease thus it is advisable to not trust any agent who says they can improve your score immediately.
    Raising disputes with the bank and CIBIL is necessary to make sure there are no errors on your credit report.
    The best way to improve your credit score is by making sure you always pay on time and not avail unnecessary credit.


  2. vimalpfizer says:

    Dear Friend,

    no the cibil score sheet doesnot answer this and I tried to find out the answers and could not.

  3. nsabhyankar says:

    The formula for credit score is not in public domain. The credit bureau does not disclose the formula.

    I doubt if anyone can guarantee a certain minimum score.
    In a number of situations (like IT return filing), you don’t always need an agent if you are ready to put in some efforts.

    You must have received a document ‘UNDERSTANDING YOUR CIBIL TRANSUNION SCORE’ along with your report. Check the answer to the question:
    “What are the major factors that affect my Score?”

  4. vimalpfizer says:

    Dear Credexpert,

    Thanks for the advice, but still just wanted to know if we could understand that how the scores are increased or reduced, so as to plan that which loan /outstanding should I close first and so on.

    Second, I had approached two credit improving agencies too thru Google search, but both were saying in about 3-5 months they will ensure my score goes to 750+ however were asking a fee of 10k. I was willing to enter into a contract that subject to delivery of promised results, I am willing but they were not willing for the same.

    I trust they also will do the same thing, which any one can does i.e. discuss with bank, pay in full and ensure its reported to cibil.

    Please advice.


  5. Credexpert says:

    Dear Mr.Vimal,

    a) In the case of Phoenix ARC, if you wish to remove the W/O status, you should pay the ENTIRE outstanding. If you pay 50% of the outstanding, the ARC will give you an NDC, but this account will be reported as a “settled account”. This will also be viewed negatively by lenders and may not improve your score.

    b) All accounts and credit cards taken by you will appear on your CIBIL report. Even if you are not using the credit cards mentioned by you, they will continue to appear on your report. But if you are not using the cards, ensure that they have been duly closed as per the bank’s processes.

    In case the credit cards never belonged to you, please raise a dispute with CIBIL. It is difficult to say to what extent it will improve your score, but it necessary to ensure that your report is error free.

    c) The entire process of improving your score is not a quick fix. It will take time. Ensure that you pay all your dues on time. Overtime, with good credit history, your score will improve.


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