Ask CreditSmart

How To Rebuild Your CIBIL After Bouncing EMI’s

It’s Easy To Rebuild Your Credit After A Bad Year

With all the great questions we’re receiving, we’re back with another installment of Ask CreditSmart! As always, if you have a credit question, just send it to us at We will do our best to reply to everyone and post some questions here that we know other people could certainly learn from. Here’s an email we recently got from Rakesh:
 Hi Team,
Good morning!!
I took a personal loan from HDFC bank in 2014 and due to some personal issues some of EMI’s got bounced.
Everything is paid off now. But i am unable to re-apply for a personal loan again. 
Could you please share how can improve my CIBIL score?

Lets Get Into It

Hello Rakesh! Thanks for the email, and we’re sorry to hear about your past issues. It’s great you have put the problems behind you but we well know how even a temporary financial hiccup can have lasting issues on your CIBIL score. Luckily for you, all things shall pass, and I can assure you that with time, good habits, and a little financial maintenance, you will once again be able to get a loan approval.
You mention you took the loan in 2014 and it is now paid off, however you did not share when you paid it off. We will assume you paid it off in 2016. A good first step for you would be to get your full CIBIL report directly from CIBIL and ensure that the fact you paid off your loan is reflected correctly on your profile. This will also enable you to see if there’s any other unexpected items on your report that might be bringing your score down.
Different banks have different policies regarding when they might re-consider a loan application from you. Even though you’ve paid it back, the problems were fairly recent, so you may be flagged with that bank for a couple years until your credit picture has time to clear up. If you do need another loan it might be wise to apply with a different bank than your original loan. But it’s best to not apply for a new loan anywhere just yet.

Slow and Steady

As for improving your CIBIL score, consistent on time payments will be your best path to a great score. You have to once again prove you are a low credit risk, so the only way to do this is by using credit responsibly. Use a credit card for some everyday purchases and bills, and be sure to pay in full each month. It’s also important to not exceed 30% credit utilization.
Yes, it is a “credit” card, but your credit score will get much better if you treat your credit line like cash. Do not spend what you don’t have. If there is any transaction that can be paid with a credit card…then use a card. Paying with cash will do nothing to improve your score. Assuming there is no major blemishes on your CIBIL report, you could see a score boost within 4-6 months of consistent payments.

No New Credit, Please

During this time, do not apply for new credit unless absolutely necessary. Consider this a rebuilding period.
I know it seems unfair. It takes just one month…just one unexpected thing to missed payment. That’s all it takes for your CIBIL score to take a hit. Then a months long process just to get back to where you were, and months more to improve. Your credit is delicate and requires constant management. That’s why we started CreditSmart, to educate people on maintaining great credit habits. Rest assured, as long as you pay your bills, time heals all scores.
Jay Kaul

About Jay Kaul

Jay is a financial and credit expert and freelance contributor to CreditSmart. He's always keeping his eyes open for the latest credit card trends in India and provides a sharp insight on new entries into the market.

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