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You would have came across this term “Written Off” in your credit report if you have checked your report. There are 4 RBI approved credit bureaus they are CIBIL ,Experian , Equifax and Highmark. The term written off is explained below
If the banks cannot recover the dues then it is reported as Written-Off (WO).The first objective of a bank in case of default is to recover the total due amount. Hence the banks always try to recover the dues from the borrower.
The written-off status is subdivided into Written-Off (Total) and Written-Off (Principal). In case of Written off – total, the 100% amount is written-off including principal and interest. In Written Off – Principal, total principal amount written-off is reported. The objective of reporting these 2 sections is to find out written-off interest.
Written off has a heavy negative impact on one’s credit score. Written off status in anybody’s credit report also mean that the person’s chance of getting Loans are highly difficult as the lender may not want to provide a loan or credit card to someone who has not paid dues on past loans or credit cards.
Example, If Mr. ABC has a Credit card which needs to be written off the total outstanding to be Written-Off (Total) is Rs 50,000 and Written-Off (Principal) is Rs 22000 then Written-Off interest is Rs 28000.
In such case the lets assume Credit score of Mr. ABC was 800 which can reduce from 800 to 680 CIBIL points if he has done written off (Principal) the same might be even come to 550 CIBIL points if he has been completely written off (Total).