Credit Score vs Credit Remarks: Here’s all you need to know

Credit Score Vs Credit marks: Which matter the most

Any person who is willing to apply for a loan or any form of credit, be it a home loan, car loan, personal loan, or business loan, must have a good credit score that is 750 or above. But still, there are many financial institutions who apart from checking credit score also studies the credit report and credit remarks. Any negative remarks available on a credit report will leave a negative impact on the borrower when getting a loan approved. It also reduces the chances of getting a quick loan.

What are the credit remarks in a credit report?

The credit remark is nothing but a statement of an individual’s financial activities. It could be one word also like ‘written off’. It is given based on your loan repayment and credit card bills history. Some financial institutions want to know more than a credit score, for them, credit remarks also matter. If the lender finds any negative remark on a credit report, they may reject your loan application. To get the best loan and credit card offers, it is a must for an individual to have a good repayment history along with a good credit score.

The most common form of credit remarks is:

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 appeared 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 "write-off. It is known as a detrimental status related to your credit card or loan applications.

3. Post- Write off settled

It 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 report on the credit report means you have made the loan payment fully; 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 become stressed about finding negative credit remarks on their reports. But there is no need to worry. The best way of working on credit remarks is obtaining a credit report from each of the bureaus. After that, highlight the positive aspects of the credit report. If you find any discrepancies on the credit report, dispute it to credit rating agencies.

Never forget to attach the supporting documents of wrong information mentioned in the credit report. If the credit remarks are genuine, you can write a goodwill letter to the agency from a different angle. You can start negotiation with the bureau based on income sources or if you get any salary hikes. It will help you in getting negative remarks removed from your credit report.

Common types of errors available on the credit report?

Identification of mistakes like phone number, address, PAN number, or incorrect name
Mixing of identity with someone other having the same name

When a closed account is reflecting open.
Account not showing
Incorrectly 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.

Know about credit score

A Credit score is a numerical representation of your creditworthiness. It is a three-digit number that ranges from 300-900. It is a way lenders get an idea of how financially disciplined you are in making loan repayment or credit card dues. So, to get a quick loan approval or credit card at the best interest rates, it is a must to have a good credit score. It is only possible to make all loan EMIs payments timely, pay off credit card dues, spend under the limit, and keep track of credit scores daily.

How is the credit score generated?

Here are the main factors that are taking into consideration while computing the credit score:

Payment History: 35%
Credit Utilisation: 30%
Credit History Length: 15%
Credit Mix: 10%
New Credit: 10%

What matters most: Credit Score or credit remarks?

As above, we have explained separately about credit score and credit remarks to make you understand the importance of both the terms in getting a loan or credit card approval. Please understand that credit score matters in a situation where you have nil credit remarks. This score is a numerical explanation of the financial credibility and repayment ability of a borrower.

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.

We OkCredit have an expert team. They can give tips for maintaining a good credit score. Secondly, the way to avoid having credit remarks on your report.

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FAQs

Q. What is a good credit score?

Ans. A credit score is a numerical representation of your financial life. A credit score is a 3-digit number ranging between 300-900. Any score which is 750, or more near to 900 is considered a good score for the best-in-class loan and credit card offers.

Q. What are the main factors that decide one's credit score?

Ans. The factors that decide the credit score are:

1. Payment history: Making timely payments of all loan EMIs and credit card dues helps build a good credit score. In case there are credit remarks of missed payments mentioned in your report, it will lower the score.

2. Credit usage- It is your credit utilisation ratio. The better your ratio is, the higher your score will be. Keep your utilisation ratio max to 30%.

3. Length of credit history: The average age of your credit account is also important in getting a credit score. The longer your credit history is, the better your credit score.

4. Credit mix: The credit mix is a good mix of secured and unsecured loans like car loans, personal loans, or mortgage loans. Managing all the loans responsible helps in getting a good score.

Q. Can credit remarks minimise your credit score?

Ans. You need to understand that having negative remarks does not mean your credit score is low. It only reflects your payment history, which is one factor in determining the score. It is only a notation mentioned in your report.