28-April-2016 written by : FSI-Team
Late payments or missed payments are the biggest cause of poor credit health; repayment history has a 35% weightage in the credit score calculation. Sometimes the issue can be due to an actual delay by the credit report holder or sometimes due to an error by the reporting bank. Whether the default is due to the borrower having forgotten to pay on time or it is due to a willful default the lending agency will report it to the credit bureau (irrespective of the reason) which will update it as a default in your Credit Information Report (CIR).
Before one can decide what to do to remove late payment from the CIBIL report they need to get their CIR and understand if the default is a genuine one or it is due to an erroneous reporting by a lender. If there is a genuine default in making a payment then your name could appear in the loan defaulter list and this default cannot be simply erased from the report. Though some agencies may promise to help you in improving your credit report, remember nobody can remove a default if it is an actual mistake from the report, they can only suggest ways to improve the rating or manage your debt better.
If after accessing your free cibil report you discover that a bank or a credit card company has made an error you need to get an in touch with the relevant financial institution to remove the error, CIBIL cannot do so on its own. Getting an error removed from the CIR is not difficult, there is process laid down to solve the issues reflecting on your CIBIL report and get it removed from the credit report and one can do so online too.
When there is an actual delay in making the payment then the action will depend on the nature of the default. If the delay is a one off case and the borrower generally has been prompt and meticulous in making payments then the lender could be requested to consider this as one time error and not report it to the agency or if already reported then change it. This will depend solely on the discretion of the lender and the payment record of the borrower. Depending on the lender’s updated information CIBIL would modify the report and you could get a free credit report also to see if the record has been updated.
In the event that the lender disagrees to do so then the borrower has no option. However if one has been regular in repaying in the past then just a single delay will have only a short term impact on the credit score which can be overcome with time. When the default has gone beyond 90 days then there is little one can do. Even if you pay the dues then also the default will continue to reflect in the report and if the borrower reaches a settlement with the borrower then it will reflect as “settled” which also is not good for the credit score.
In essence removing an actual late payment from the CIBIL report is technically not possible by the borrower. The borrower can request the lender to so as goodwill gesture if it is an isolated case. When the delay is willful or there are `frequent delays then rebuilding the credit score will take time and patience.
Repaying on time is the biggest contributor to building a healthy credit score and delays can pull down the score drastically. All borrowers should make sure that all payments are made on time so that no delays are reflected in his/her credit report. Any delay is reflected for minimum seven years in the CIR; removing its effect will take time so it is best to avoid a default in the first place.