CIBIL Masking is nothing but an offer to defaulter to clear all the past dues along with penalties and interests. The past dues or outstanding loans are either written off or settled in the CIBIL report of a defaulter. If borrower accepts CIBIL Masking offer then the bank promises to remove Written-off or Settled Status from the CIBIL Database. To know more about these 2 terms, please check my post, CIBIL Score – 7 Jargon you should know to read CIBIL report. Before we proceed, i would like to request the readers to understand your CIBIL report before taking any decision or action. The probability of cheating increases, if the borrower is not fully aware of the nitty gritty of CIBIL report.
In most of the cases, the recovery or credit improvement agencies lure the defaulter to pay the outstanding amount to increase the CIBIL Score. They misuse the term CIBIL Masking. It may or may not be possible in all the cases. Therefore, it is important to understand the details before making any decision. At first place, i never suggest readers to default and reach this stage. In few cases, the borrower is responsible for his low CIBIL Score.
As i mentioned that under CIBIL Masking, once the dues are cleared, the written-off or settled status is removed from the CIBIL report of the borrower for old credit histories. It’s a huge relief to the borrower but normally comes at a heavy price. The concept sounds good. Usually, CIBIL Masking has an immediate and substantial impact on your CIBIL Score depending on the type of account and fulfillment of commitment by the bank.
Now you must be wondering, Wow..great concept, where is the possibility of cheating in this case. You can be cheated if CIBIL Masking is promised by the agency/firm that does not have the authority to do so. To take the example of Ms. Neha. She is a regular reader of this blog. Her CIBIL Score was 645 and was in an urgent need of a loan. One of the credit improvement agency charged Rs 16,000 to improve the CIBIL Score. She was offered CIBIL Masking and this agency acted as intermediary. She was told to pay a heavy amount and she obliged as she was running out of time to close a home loan. Even after a couple of months, the score and status of loan account were same. When she approached the bank, she was told that her account was sold to some recovery agency. The amount is paid to recovery agency and not to the bank. Bank cannot help in CIBIL Masking.
In the example mentioned above, the intention of a defaulter is to clear the dues. It should be reciprocated by CIBIL Masking. She is being cheated because of false promise by the recovery agency that is not authorized for CIBIL Masking. Therefore, as a borrower, you should be careful while accepting any offer of CIBIL Masking. Let’s check out important points.
CIBIL Masking – All you want to know to avoid being cheated
1. Only Bank or original lender can help in CIBIL Masking:
As i mentioned earlier and in my other posts, only bank or the original lender is the authorized entity to make any changes in your CIBIL report. You should be beware of any promises from law firms, recovery agencies, credit improvement agencies, ARC etc. They cannot help in CIBIL Masking. Mostly these are independent agencies, commission agents or buy outstanding accounts at a heavy discount. For example, in the case of recovery agency they will buy an account with dues of Rs 50,000 at Rs 10,000 depending on the probability of recovery. Any recovery above Rs 10,000 is a profit for the agency. As a recovery agency, i can promise CIBIL Masking and will demand Rs 30,000. You should deal only with the bank or original lender.
2. Terms and Conditions on Bank’s Letter Head or through Email:
As i keep highlighting that oral commitments have NO LEGAL standing. The trust factor exists only in writing i.e. in white. If the interaction is over email then it should be with the responsible employee of the bank not less than the Nodal Office Team of the bank. Reason being, the bank should not backtrack from the commitment. An oral commitment of a bank manager has NO VALUE.
3. NOC does not guarantee CIBIL Masking:
It’s the biggest misconception that if you receive NOC then all is well. In most of the cases, there is a clause in NOC that clearly mentions that “CIBIL record for the defaulted account will remain the same as reported on the occurrence of default i.e. Write Off or Settled status will remain the same till the old dues plus accumulated interest on the same are paid.”
In one of the cases, my client received a legal notice from the bank. The law firm is outsourced and they promised NOC from the bank to my client. He paid the amount but his CIBIL Score didn’t improve. When he approached the bank, he was told that bank never promised to change the CIBIL status. The clause shared by me was mentioned in the bank NOC. The client felt cheated but that is how it works. When he approached me for the solution, i suggested him few points but nothing much can be done in such cases. It is always advisable to understand and discuss the case with a bank or hire a professional.
How to Apply for CIBIL Masking?
Let me clarify that there is no standard process. I suggest processes similar to the one i shared in this post to my clients. It basically highlights how to approach the bank for CIBIL Masking. The following process is a general process and may vary from case to case basis
1. You should approach the bank with a request to rectify your CIBIL Report. In your request, you should specifically mention that you are looking for CIBIL Making of the outstanding loan.
2. This request should be ideally placed with the Nodal Officer of the Bank or Nodal Office Desk. I don’t suggest to approach bank manager and other employees as they are normally clueless. They will waste your time.
3. For sure, the nodal office will revert to you with the details of the history of your account and outstanding amount along with calculation sheet. They also provide the date till which you can clear the balance outstanding.
4. Normally, the interest rate is demanded and penalties (if any) are waived off.
5. You can reply with your consent and agree to pay the amount demanded (if it is correct). You can demand the detailed terms and conditions of CIBIL Masking. Also, seek info within how many days, the bank will report to CIBIL from the date of payment. You can request them to share how the account will be reported to CIBIL after all the dues as demanded by the bank are cleared. Please note that details to be requested from the bank may vary from case to case basis. I only shared the general details i.e. common among most of the cases.
6. Once you receive detailed terms and conditions & you are satisfied with the same. You can pay the outstanding dues under CIBIL Masking arrangement.
7. Share the payment receipt with the concerned officer with whom you were interacting and request him to initiate the process of CIBIL Masking.
8. You can demand fresh No Dues Certificate and NOC. NOC should not mention clause as i shared in “NOC does not guarantee CIBIL Masking”
9. You can follow up with the bank and once you receive confirmation from the bank on CIBIL Masking, you can pull out your CIBIL report to check the same.
10. At the same time, you can also raise an online dispute with CIBIL. They will check with Bank whether to update the same or not. You should exercise this option only if there is a delay from the bank.
Caution: Please note that impact of CIBIL Masking cannot be quantified. For example, if you have three outstanding loans and you cleared one under CIBIL Masking then the impact will not be much. The impact on CIBIL Score may vary from case to case basis. The only guarantee is that it will positively impact CIBIL Score. In short, it is relative in nature.
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