I walked into the bank with confidence. I had a stable job, a good salary, and I had even found my dream apartment. The Home Loan felt like a formality.
Three days later, the email arrived. "Loan Application Rejected due to Poor Credit History."
I was shocked. "Poor credit? Me? I pay my bills!" I rushed to the bank. The manager showed me my CIBIL report. The score was a glowing red 550.
"But how?" I argued. "I don't have any pending loans!"
He pointed to an entry from 4 years ago. "Credit Card - Status: SETTLED".
The "Settled" Trap
I remembered. Years ago, I had a dispute over a ₹20,000 credit card bill. The bank offered a "One Time Settlement" of ₹12,000 to close it. I thought I got a discount.
I was wrong. "Settled" means the bank accepted a loss. It tells other banks: "This person does not pay back the full amount." It is a black mark on your report for 7 years.
Step 1: The Diagnosis (Knowing the Problem)
My first step was to stop guessing. I downloaded my detailed CIBIL report (not just the free score summary). I saw two major issues:
- The "Settled" credit card status.
- An old "Consumer Durable Loan" for a TV that I had closed 2 years ago but was still showing as "Active" with ₹500 pending.
This was an administrative error by the lender, but it was killing my score.
Step 2: The Clean Up (Fixing the Report)
I couldn't change the past, but I could fix the records. Here is exactly what I did:
Action A: Closing the "Settled" Account
I contacted the credit card bank. I offered to pay the remaining ₹8,000 (the amount they waived off years ago) plus interest. It cost me ₹15,000 total.
Once paid, they issued a "No Dues Certificate" (NOC) and changed the status from "Settled" to "Closed" in the next reporting cycle. This single move boosted my score by 60 points.
Action B: Fixing the "Active" Loan Error
For the TV loan, I didn't pay anything. I found my old closure email receipt. I raised a Dispute Request on the CIBIL website, uploaded the proof, and within 30 days, the status changed to "Closed".
Lesson: Audit Your Report
Don't just look at the score. Look at the Account Status of every loan. If a closed loan shows as active, it hurts your Debt-to-Income ratio. You can fix this online for free.
Step 3: The Rebuild (Building Good History)
Fixing errors got me to 650. But to get a Home Loan, I needed 750+. I had to show "Good Behavior."
I took a Secured Credit Card (backed by a Fixed Deposit) because no one would give me a regular card. I used it for just ₹5,000 a month (grocery/fuel) and paid the FULL bill on day 1.
The result? Consistent repayment history. My credit utilization remained low (< 30%). Month by month, the score climbed.
Nine months later, I walked back into the bank. My score was 780. The loan was approved in 48 hours.
Start Your Recovery Today
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