Suit Filed
When people dream about owning the perfect home, achieving it is very exhilarating yet strongly filled with obstacles. Also, most homebuyers face the obstacle of a Suit Filed tag being placed on their CIBIL reports. You recently checked your credit report and found a tag that might affect your ability to get a home loan or buy that dream property.
Does a Suit Filed Tag on Your CIBIL Report Ruin Your Dream Property?
Let’s break down the ‘Suit Filed’ tag through a three-tiered breakdown in this blog. We will find out how it might affect your eligibility to take up a home loan and list down a few steps you can take to clear the hurdle that it throws your way.
What does 'Suit Filed' tag mean?
You filed a suit tag on your CIBIL report because of a defaulted loan or credit repayment, resulting in a case being filed against you. Typically, this happens when a lender takes you to court due to non-payment of dues, such as credit card bills, personal loans, or home loan EMIs.
You filed a suit tag on your CIBIL report primarily because of a defaulted loan or credit repayment, ultimately resulting in a case being filed against you. Generally, this happens when a lender takes you to court as a result of non-payment of dues, such as credit card bills, personal loans, or home loan EMIs.
How Does the "Suit Filed" Tag Impact Your Dream Property?
1. Low Credit Score:
Your CIBIL score is initially affected by the ‘suit was filed’ tag. Consequently, banks and financial institutions view you as a riskier prospect because the default leads to litigation, which ultimately lowers your credit score. As a result, a low score often attracts higher interest rates or even outright rejection of loan applications.
2. Eligibility for Lower Quantum of Home Loan:
A credit score largely determines eligibility for a home loan. However, if a Suit Filed tag is present, the lender might lower your score and refuse the loan. In many cases, home loan lenders reject the application outright, perceiving litigation as an indicator of your potential inability to repay the loan.
3. Inaccessibility to Loans:
Even if there is a lender who agrees to grant you a loan, the conditions might still not be perfect. For instance, you could face lower interest rates, shorter loan tenures, or more stringent repayment terms. Additionally, the lender may require extra security or even insist on a co-applicant with an excellent credit rating to reduce the risk.
4. Delay in Home Purchase:
If a ‘Suit Filed’ tag appears on your CIBIL report, lenders are likely to deny loan approval or even cause unnecessary delays. Furthermore, you may have to jump through various legal hoops and also clear up the case details beforehand, which could ultimately delay your home buying plans by several months or perhaps even years.
What to Do to Address a "Suit Filed" Tag?
While the Suit Filed tag seems pretty adverse, you still have room to maneuver and increase the chances of getting your dream property. Here’s how to do it:
1. Clear Your Dues
If the legal suit is based on your non-payment of loans, you first need to pay back the dues to the creditor or lender. Once the outstanding balance is cleared, you can request the lender to update your CIBIL report. Over time, you can improve your credit score by maintaining a settled or paid loan account, even though the ‘Suit Filed’ tag may not disappear immediately. However, if you win the court case, be sure to have the tag removed by CIBIL after providing the required court documentation.
2. Negotiate with Creditors
You can negotiate with your creditors to settle or restructure the loan if you’re unable to pay the full amount. In certain cases, you and your creditors might reach an agreement for partial payment and work out a more accessible repayment plan. This way, you can help minimize any negative impact on your credit score.
3. Dispute Incorrect Information
You can challenge the ‘Suit Filed’ tag in your report if you believe it is due to a mistake or false information with CIBIL. To begin with, you attach all supporting documents, after which CIBIL verifies them. If you are proven right, then they update the error on your report.
4. Apply as a Co-Applicant or Guarantor
A good credit co-applicant may help you secure financing for a home loan despite a Suit Filed tag significantly impacting your credit history. You or your spouse, parent, or sibling, with their agreement, could cosign my loan. A good credit guarantor might increase your chances of getting a loan approved.
5. Wait for the Tag to Expire
A good credit guarantor might increase your chances of getting a loan approved. The duration of credit reporting on legal cases is 7 years or until the tag falls off. I can rephrase this to active voice. While waiting for the tag to be removed from your report, actively work on improving your credit score by paying all current bills on time and decreasing existing debt.
Final Thoughts:
A legal tag, filing a suit, shouldn’t obstruct your path to your dream property, but undoubtedly this is not the end. With patience, persistence, and a proper strategy, you can go on to overcome this and obtain that much-needed home loan.
Debate the inaccuracies and ensure that past dues are settled to improve your credit score over time. If the case goes in your favor, you must update the CIBIL record as well. You can take proper initiative to change things and make your dream home a reality.