Does your CIBIL score decrease even when the check bounces? If there is confusion, do it away here
You must have heard about the check bounced. You must also think that it is not a big deal to bounce check. but it’s not like that. If you bounce again and again, you may have to bear the brunt of it. According to Tata Capital, the constant pattern of check bounce may indirectly affect your CIBIL report. The CIBIL score plays its role in deciding your eligibility to get your loan. Due to the weakening of the CIBIL score, the bank assumes that you may be unable to repay EMI on time. In such a situation, it is important to look at it.
How CIBIL score is affected by check bounce
Improvisation
Banks are constantly careful about check bounce cases. If your check is rejected once due to technical problems, the authorities pass it as a separate case. However, if it becomes a regular problem, the bank sees it as a financial irresponsible. In such a situation, your relationship with the bank is bad.
Credit facility may be banned
With regular check bounce, bank officials can block overdraft facilities, reduce credit limit, or freeze the account. Such restrictions can affect your financial transactions and management. For business owners, restrictions on credit facilities affect cash flows and sellers.
Litigation may have to face
If the case of check bounce reaches the court, the court will not be in your favor. You will get a recovery order, which may cause damage to your financial reliability. Although the court’s decision does not directly affect your CIBIL score, your applications can be rejected in future.
Increases risk
A bounce check leaves a negative effect in the minds of banks. They think you are a high risk customer and may not approve your loan application. However, it may not directly affect your credit report or CIBIL report, but it may reduce your possibilities of acquiring loan acceptance.
What is CIBIL score?
CIBIL i.e. Credit Information Bureau India Limited releases a number of 3 digits called CIBIL score. It is between 300 and 900 and reflects the credit and repayment capacity of the account holder. Credit score is set by your financial history, EMI repayment and credit card bill clearance. The score above 750 reflects a low risk. The score below 750 reflects high risk.
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