Anyone seeking a loan or other type of credit, whether it’s a home loan, vehicle loan, personal loan, business loan or education loan, must have a credit score of 750 or above. Nonetheless, many lending institutions examine the credit report and credit notes in addition to the credit score. Any unfavourable information on a credit report will have a detrimental impact on the borrower’s ability to obtain a loan. It also lowers the possibilities of obtaining a fast loan. In this blog you will get to know more about credit score vs credit remarks.
What Are Credit Score Vs Credit Remarks?
A credit report is only a statement of a person’s financial actions. It could also be a single word, such as ‘written off.’ It is based on your payback history for loans and credit card payments. Some lending companies are interested in more than just a good credit score as credit remarks are equally important to them. If a negative remark on your credit record is discovered, the lender may reject your loan application. It is necessary to have a strong payback history as well as a decent credit score in order to acquire the finest loan and credit card offers.
The Most Common Form Of Credit Remarks
1. “Settled”
This credit remark appears on the report in case you have partly paid the dues or settled a loan or any of the credit card dues with the lender. The status after settling appears as ‘settled’ in your credit report. Having this remark in your credit report leaves a negative impact and creates hassles in getting a credit application approved as per your expectations in terms of interest rate.
2. “Written-Off”
When you find it difficult to make loan repayments and no payments made from the past 180 days. In that case, the status that appears on your credit report is “written-off. It is known as a detrimental status related to your credit card or loan applications.
3. “Post-Write Off Settled”
This happens in cases of debt settlement after the written off of outstanding dues. It takes place after 180 days of non-payment. If you are making partial payments of outstanding dues, your credit report will reflect the same status. Having these credit remarks will leave a serious impact on credit score and damage credit status. Avoid having such credit remarks to get a quick and best-in-class loan and credit card offers.
4. “Willful Default”
Any default mark reflecting in the credit report indicates non-payment of loan EMIs. A willful defaulter is the one who is intentionally making loan defaults despite having sufficient funds to repay the loan amount. This scenario is quite different from the ‘write-off’. If the borrower is not making use of the sanctioned loan amount. They are considered a willful defaulter and use the funds for any illegal activities.
5. “Closed”
This credit remark on the credit report means you have made the loan payment fully, and the account stands closed. Make sure after closing the account, the lender provides you with the no dues certificate or closure letter stating that the loan stands closed from the end of the financial institution. Within 45 days, the ‘closed’ status will start reflecting on your credit report.
How To Remove Credit Remarks Available On The Credit Report?
Borrowers grow anxious when they see derogatory credit marks on credit reports. But there’s no need to be concerned. Obtaining a credit report from each of the bureaus is the greatest way to work on credit remarks. After that, emphasise the credit report’s good parts. If you discover any errors on your credit report, contact the credit reporting agencies to file a dispute. Never forget to include supporting documentation if the credit report contains incorrect information. If the credit remarks are real, you might write the agency a goodwill letter from a different perspective.
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Common Types Of Errors Available On The Credit Report
1. Identity-Related Errors:
- Identification of mistakes like phone number, address, PAN number, or incorrect name.
- Mixing of identity with someone else having the same name.
2. Account Related Errors:
- When a closed account is reflecting open.
- Account not showing.
- The Incorrect account is looking like the default.
- Incorrect date of EMI payment or incorrectly showing late payment.
- An account listed more than once with different creditors.
- Showing old accounts or errors related to balance.
Usually, the negative credit remarks like missed payment, late payment, settled, or post settled written-off remarks are reflected in the credit report for seven years.
How Is The Credit Score Generated?
Here are the main factors that are taken into consideration while computing the credit score:
- Payment History: 35%
- Credit Utilisation: 30%
- Credit History Length: 15%
- Credit Mix: 10%
- New Credit: 10%
Credit Score Vs Credit Remarks: What Matters More?
As previously mentioned, you have read the credit score and credit remarks individually in order for you to grasp the significance of both words in obtaining a loan or credit card approval. Please keep in mind that your credit score is important even if you have no credit history. This score is a numerical representation of a borrower’s financial trustworthiness and repayment capabilities.
The credit score is a straightforward way of understanding creditworthiness in comparison to studying credit remarks mentioned in your credit report. If the lenders want to decide the terms and conditions of loan approval, the lender always checks credit score first.
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FAQs
1. What are the remarks on the credit report?
A remark on your credit score stems from your lender reporting it to the credit agency, rather than the credit score provider itself. It’s important to note that these remarks are distinct from alerts issued by your credit issuer, which may pertain to a low credit balance or a fraud alert.
2. Why are remarks removed from the credit report?
This situation can occur when you file a dispute directly with the credit bureau or when your lender contacts the bureau to rectify any inaccuracies in previous reporting.
3. How long do remarks stay on your credit report?
Remarks on your credit score remain for 7 years.
4. How often is a credit score updated?
It is updated once a month.
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