ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Frequency of Cibil Updation After Payment of Debt

Updated on January 7, 2020
PrateekJain24 profile image

Certified credit professional with experience in guiding and helping clients in understanding the credit norms to boost their credit score

Debt
Debt | Source

1. Overview

  1. As you approach the finish line to pay off your small personal loan and you can expect a better credit score.
  2. Paying off your smaller loan will help you in getting bigger loans in the future. The higher your credit score the more likely you are to get a loan according to your need and you will be able to get a credit limit or a credit card at low-interest rates.
  3. There are many factors that will help you to know how your credit score will change after repaying the debt.
  4. We will also have a concrete look at the factors that affect your credit record and the type of loan you took.

2. Time Taken to Update Credit Score

  1. The most common question peoples ask me nowadays that after paying debt how often does the credit score change.
  2. So my reply to all of them is that the effect of the update may seem to you immediately, but practically this is not the case.
  3. If your balance reaches nil outstanding even then it will not be reflected in your credit report and credit score until the lender reports the payment to the credit information bureau India limited.
  4. The billing cycle can take up to two times or two months because lenders usually report their activities to a credit reporting agency on a monthly basis.

3. Factors Affecting Credit Score

  1. To understand how your credit score changes after the loan are repaid, first you need to know what makes up your credit score.
  2. There are two main sources for credit scoring and these are the FICO score method and the vantage score method. Both have different models and lenders who are using these credit scoring sources have their own algorithms.

The FICO Score

 
 
Payment history
35%
Unpaid amount
30%
Credit history length
15%
New credit
10%
Credit mix
10%

The Vantage Score

 
 
Outstanding income
Very influential
Credit mix
Very impressive
Payment history
Somewhat valid
Credit history length
Not impressive
New credit
Not very effective

4. Factors Influencing Credit Score

  1. Your outstanding utilization of credit will show a positive increase in your credit score when you will pay off the loan.
  2. In general, it is recommended for keeping your credit usage below 30% because paying a credit card or credit line greatly improves your credit record and significantly increases your credit score.
  3. If you will foreclose your loan then your credit history will be for a shorter period and ultimately this may lead to a low credit score if the rotational average is also lower.

5. Long-Term Impact Of Debt Services

  1. Debt payments do not end your payment history and if your loan has been repaid completely but you had failed to pay any equated monthly installment on time then those payments can appear in your credit report for up to seven years.
  2. With the vantage score, the negative impact on your credit score diminishes over time whereas this is not possible in any other method.
  3. Making your credit card payments on time and keeping your credit account up to date and not missing any installments will rebuild your credit history and improves your credit score.

6. Types Of Debt

Below are some types of debt that have different effects on your credit score as you repay them.

A) Rotation Credit

  1. The revolving credit is a line of credit that remains open for a preset period. You can spend everything you want up to your credit limit.
  2. The most obvious example is a credit card. Other examples are mortgage-backed credit facilities (HELOC), personal credit facilities and overdraft protection of checking accounts.
  3. Revolving credit implies that a business or individual is pre-approved for credit. A new loan application and credit reevaluation need not be completed upon each instance of the utilization of rotating credit.

B) Installment Loan

  1. An installment loan is a loan that is repaid over time with the set number of a scheduled installment. The lender may charge a fee if you repay the loan earlier.
  2. Examples of installment loans include car loans, mortgages, personal loans, and student loans.
  3. Many people also want to know whether student loan repayments should improve their credit which is absolutely true because the payment of student loan installment is very beneficial for credit score to rise.
  4. Payments towards installment loans can help your credit by reducing your overall debt, but they can also damage your credit if you don't have other loans or lines of credit.
  5. This is because of the credit combination, which is the factor that improves the score when there are several types of credit.

C) Collection Account

  1. If you have not repaid your loan and defaulted in installments then lender sells it to a debt collection agent and the account will become non-performing assets that mainly occur on credit limit or unpaid bills.
  2. Credit bureaus are informed about this breach and it also appears on credit reports and this default collection summary remains on your credit report up to seven years after the date of reimbursement.

D) Debt Payment

  1. Debt settled accounts stay in credit score for seven years also for the unexpired accounts, the seven-year period begins from the day when the account is settled. If your account is overdue and has unsettled dues then fix the dues in first priority.
  2. A better way is to settle the debt otherwise leaving unpaid and defaulting on them. Settlement works better for your credit score. However, a settlement account will not look as good on a credit report as a fully paid account looks.

7. Closing Words

  1. When it comes to balancing debt payment with credit creation mainly managing a good credit score as well as maintaining financial health is quite difficult.
  2. Therefore simply focus on paying bills and repaying loans in time and do all that you can to build a good credit score because these two actions are highly effective in building a credit score.
  3. Use a new debit and credit card only if you are capable of managing your minimum due balance and able to pay it on time. Otherwise, you will run the risk of destroying your good score.
  4. Be patient with your credit score and with a well-managed debt, your credit score will improve in due course.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Prateek Jain

Comments

    0 of 8192 characters used
    Post Comment
    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you for your feedback Madhu sir. You are saying correct that all the people's who have a habit of applying for loans or credits acres frequently will have to know what are the consequences of frequent enquiries and should eleminate these habits in order to maintain a good credit score and everyone should check their Cibil report. Glad to know that you liked the article. You are very experienced and knowledgeable person and I am just a beginner in this and will hope to become as disciplined and inspiring for all some day like you.

    • digitalinfopreneur profile image

      Madhu Padala 

      2 months ago from Kancheepuram, India

      Prateek Jain this information is very useful especially for people who have the habit of applying for loans every now and then. This information would definitely help many to control their finances and work towards their betterment accordingly. Many of us due to lack of proper knowledge fall prey to huge interest rates and later regret taking loans to fulfill our short term dreams, thus paying extra on default payments. Money matters these days have to be dealt very cautiously thus increasing on more savings out of our hard-earned money. Love your article Prateek and thanks for sharing your thoughts.

      Best Wishes.

      Madhu Padala

      http://hub.me/angb9

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you Sumit sir for sharing your views over the article, you are like a big brother me who always read my articles to evaluate and share your feedback by way of commenting. Your participation and efforts are really appreciating. I am glad to know that you found this article informative. Will be sharing more valuable information with all in near future.

    • Sumit273 profile image

      Sumit Chakrabarti 

      2 months ago from Kolkata

      Very useful article on CIBIL scores updates. It is crucial for all to know how credit history affects a person's eligibility to get a future loan. Particularly, the information on negative history remaining in the credit report for seven years is an important information because it makes a lot of difference in potential borrowers' financial viability. All the aspects of credit updates have been perfectly covered in this article. A really praiseworthy effort Prateek!

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you Devika mam for your appreciation, I really want to make sure that information will circulate to everyone who is not aware of these facts and can take benefit from these information. There is alot to share about the credit score and policies and I will make sure to share them all in coming articles. If you want to know more then I will request you to kindly read upcoming articles also. Thanks you.

    • DDE profile image

      Devika Primić 

      2 months ago from Dubrovnik, Croatia

      Your insight on this subject is is useful and informative. Explanations are to the point.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you simran. Gad to know you find the article informative. I had really tried to put all the relevant and required information to explain how does the credit cycle works and how much time does it takes to update our CIBIL status after we make the payment of debt.

    • profile image

      Simran Malhotra 

      2 months ago

      Hey Prateek, I found Your Article Verful Useful,You Have Very Well Explained Us How We Can Maintain and Improve Our Credit Score. It is very useful information for all business giants and corporates in order to easily get bigger loans in future my maintaining good credit score. Very Relevant Information, Thanks For Sharing.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thanks for sharing your feedback Suchi mam.yiu have interpreted the correct meaning of the given information. You always encourage me to think differently and creative at the same time. I am inspired from you to think and explain my views in a creative way.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you very much prantika mam, I am glad to know that my Articles help you in knowing and understanding Financial terms and factors which you should keep in mind and abide by in order to maintain a healthy credit score which will helps you in taking any loans in future from any financial institutions.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you Murli sir. Glad you liked the article. Thanks for encouraging and supporting me always. I have given many important inputs in this article to explain how and when does the credit score updates after an individual repay their debts.

    • Suchismita pradhan profile image

      Suchismita Pradhan 

      2 months ago from India

      CIBIL score is an important factor that is considered by lenders at the time of offering you a loan or credit card.So its better to keep in check so that you will not face any difficulty in getting a loan in dry season of your life.Thanks for sharing.

    • Prantika Samanta profile image

      Prantika Samanta 

      2 months ago from Kolkata, India

      I found this article helpful as it provides a great deal of information on how to maintain good credit score and what are the factors that need to be considered. Good to know that we need to primarily focus on timely payment of bills and loans and the credit score will increase gradually. But there are other factors as well.

    • hmkrishna profile image

      Halemane Muralikrishna 

      2 months ago from South India

      Good insights in to improving CIBIL score. Very good article Mr Prateek.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)