Mumbai: Due to a financial crisis, if you were unable to pay your full credit card bill and opted for a settlement, it may bring temporary relief. However, it leaves a permanent mark on your CIBIL score. This indicates to banks that you were not capable of paying the full amount, which can affect your chances of getting future loans or credit at good interest rates. Still, there are ways to improve your CIBIL score after a settlement.
Understand Your Account Status
After settling your credit card, first get a copy of your credit report from CIBIL. Look for the section that shows your credit card details. The status should now appear as "settled" because the full amount was not paid. This is different from "closed" (full payment made) or "written-off" (no payment for over 180 days).
Steps to Improve Your CIBIL Score
Check Your Credit Report
Start by getting a copy of your credit report from CIBIL. Check it for any errors or outdated details. If you find mistakes, dispute them immediately. Fixing incorrect information can help your score.
Pay Off Remaining Loans
If possible, pay off your other ongoing loans. This shows financial responsibility and can slowly increase your credit score.
Keep Credit Use Low
Try to use less than 30 per cent of your credit card limit. Low credit usage is seen positively and helps improve your score.
Make Timely Payments
Always pay your bills on time. Late payments hurt your credit score. Set reminders or automatic payments to manage this well.
Limit Credit Inquiries
Every time you apply for credit, an inquiry is made. Too many inquiries in a short time can lower your score. Apply for new credit cards only when truly needed.
