You are unable to pay your monthly EMI payment. And you are not paid payments from many days. Therefore you will be defaulter by lender. And also see unable to pay EMI or missed EMI payments. Probably, you can check closing credit card with zero balance. Hence, see closing credit card account with outstanding balance. However, see procedure for closing credit card account.
Credit card account closure
However, it is important to know that closing credit card won’t make overdue go away. In some cases, closing card can hurt your credit score more than it helps. Similarly, it is not good to close an existing credit card.
Also, it’s better to cancel new cards before old ones. And you may want to keep cards with good rewards program. Above all if you have been making one time repayments every time. Therefore closing old and unused credit accounts can help you avoid unnecessary fees and guard against theft. However, it can also cause your credit score to drop.
You can close credit cards that not using. But you can keep at least one as required. You ensure that you do not utilize available credit line. Probably, you need to keep credit utilization up to 50%. This way you will not consider credit hungry. And this will help you to build your credit score.
Your credit score might go down while closing credit card
As long as your credit card account do not have any negative marks. Its impact will be for many years to come. And that’s true if you close it or not. Even if you have made regular payments and there is no outstanding amount against your name. Also affects your credit score go down.
Pay your credit card balance in full
Before you close your credit card. You need to pay your balance in full. Make sure you allow any pending purchases before final check. Once you’re final payment and your account balance drops to zero. So you will able to move forward. Find below mentioned status can be found against your credit card account.
Closed account is reported to credit bureaus
However, closing an account doesn’t mean its positive impact is over. Credit accounts with no negative marks can remain on your credit history for up to 7 years. And closed account reflects with blank status in credit bureau report. Hence, you must ensure that this is reflecting on your report.
Impact of settle Credit Card or Loan Dues?
Settling a credit card account can have long-lasting negative effects. But Settlement mean that bank customer pays only part of overdue and bank closed credit card or loan account. However, settlement on your report actually affects your credit score negatively. It is very difficult for you to get loan from any lender. It is difficult to issue new credit in future.
If you have not paid total outstanding to your credit card issuer. And that issuer has mutually agreed to settle for an amount lesser than total outstanding. Mostly banks may be unwilling to approve credit cards and new loans to anyone who has settled account from past. However, some circumstances where there is no option except going to settlement. But it will have long lasting negative impact on your credit score.
Furthermore, it all depends on lender in reporting this date to bureaus. If you apply for fresh credit with this settlement tag there may be possibility of getting your credit rejected for some period of time. Also, you cannot calculate impact on score as there are number of parameters based on which you get score.
What Is a Credit Card Debt Write-Off?
If you fail to make payments on your credit card. Then Credit Card Company may declare your debt uncollectable. This is referred to as credit card debt write-off. And also called credit card charge-off. But Writing off debt allows credit card Company to report it as loss and reduce its tax liability.
However, this will negatively impact your credit score and future loan eligibility. Both Written off and settled status on your credit card accounts will affect your creditworthiness. And you must act to get these accounts closed. In addition, you might see status listed as suit filed, DPD, Post write off settle etc.
Loans and personal loans have monthly installment (EMI). As long as these are repaid loan will self liquid at end of tenor. You must have no problem in way loan is closed and report to credit bureau. In future, it consider as negative by lenders.
Similarly, if you are unable to meet your EMI monthly payments depend on number of days. You will be defaulter by lender if you have not paid EMI. In case of non payments of monthly installments will result in your loan account be classified as written off?
Under some conditions you are unable to meet payment lenders will offer an option. It is one time settlement where you have to pay lesser amount than total outstanding amount. But settlement might provide you temporary respite. In future, if you are apply for loan as bank is not willing to lend. Because of your credit history.
Right Way to cancel loan
One way from this situation is to close loan account properly. You must first obtain your credit report and check if you have any loan account in written off or settled state. In right manner you need to close your loan account. You need to get in touch with lender to pay outstanding dues.
Non-receipt of NDC from lender
Some lenders issue NDC on spot. If pre-closure is made by paying cash. In case it is made through cheque, or if loan closes automatically when tenure gets over. Then bank sends this letter to borrower’s address and you supposed to collect original documents from bank. It is legal proof that you have closed your loan account without any outstanding dues.
However, you need take right decisions for closing an old account with any outstanding amount. Hence, this only way to ensure that these accounts do not affect your future borrowing capacity.
Finally, see loan closure letter format. However, you can also see personal loan closure format. But you need see Loan clearance certificate from bank. For more details see how to cancel credit card online. Hence, check how to cancel credit one card.