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Ask CreditSmart: Tips When Paying Off Credit Card Debt

Clearing Debt All At Once Does Not Give Instant CIBIL Boost

 

Reader Zoheb is planning to pay off multiple credit cards and has a few questions.

From: Zoheb
Subject: Regards to cibil clearanceMessage Body:
Hi team,
I need some help for my queries..
1)I have in all 5 credit cards outstandings from different banks which I want to clear off at once paying all dues with interests. So what all things I must take note while paying so that I get my cibil totally cleared.
2)how much time it takes for cibil updating records and will respective banks will update or I have to do it..if I then how?
3)once I clear all records will I face trouble getting loans in future due to this past records
Hello Zoheb!
Thanks for your email, we are glad to see you taking initiative to get everything sorted out properly in regards to your debt and CIBIL. Lets see if we can go through your questions.
Question One
1) I have in all 5 credit cards outstandings from different banks which I want to clear off at once paying all dues with interests. So what all things I must take note while paying so that I get my cibil totally cleared. 
The first thing you should do is get, in writing, from the various banks the exact amount you owe. Make sure that no further late fees or charges will be added after the fact. We have seen this happen before where the card issuer tells you one amount, only later to find out some late charge or assessment is weighing down your CIBIL. Get as much as you can in writing so you have proof if you need to dispute your payments.
Question 2
2) how much time it takes for cibil updating records and will respective banks will update or I have to do it..if I then how?
CIBIL updates their records all the time as credit card issuers send updated information about users. It’s safe to assume a 30-45 day period before seeing the paid off debts reflected on your report. Don’t expect an instant huge boost to your score either. You have shown a pattern of falling behind since you have 5 cards with outstanding debt, a strong CIBIL score is only built through time and good payment habits. You will see incremental score increases over time as you make on time payments and not utilize too much credit.
Question 3
3) once I clear all records will I face trouble getting loans in future due to this past records.
The short answer here is yes, probably. Unless you have a high income to compensate for the low CIBIL score you have found yourself with, lenders will not be jumping to offer a loan to you until your CIBIL displays a positive and consistent repayment history. Lenders like reliability, and although paying off your debts in one shot is great, it looks better to CIBIL when you charge small amounts each month and pay in full consistently.
Best of Luck,
CreditSmart Staff CreditSmart
CreditSmart

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