A “Suit Filed” remark in your CIBIL credit report is a serious red flag. It indicates that a legal case has been initiated by a lender in your credit profile due to non-payment or default on a loan. Whether the default happened due to financial hardship or intentional negligence, once a lender files a legal suit, they also notify CIBIL, and this status is added to your CIBIL credit report.
What Does a CIBIL Suit Filed Status Mean?
When a lender takes legal action against a borrower for defaulting on payments, this lawsuit is reported to CIBIL and other credit reports. The account involved will reflect a “Suit Filed” remark in your credit report and your credit profile, which significantly damages your creditworthiness. To rectify this, the borrower must fully repay the outstanding amount—not settle but pay in full—to have the account marked as “Closed” instead of “Settled.”
Why Do Lenders File a Suit?
Lenders or collection agencies file suits when:
The borrower has repeatedly missed payments
The borrower ignores payment reminders
The borrower is classified as a willful defaulter (someone who can pay but chooses not to)
These legal steps are often a last resort to recover outstanding dues.
Impact of a Suit Filed on Your CIBIL Report
A “Suit Filed” status in your credit report can lead to:
Denial of future credit or loans
Higher interest rates, if approved
Difficulty securing rentals, mobile connections, or employment
A long-term dent in your financial credibility
If you believe a suit has been filed against you unfairly or mistakenly, you can immediately contact us and avail our services.
What If the Suit Filed Status Stays for Too Long?
Prolonged presence of a “Suit Filed” remark can seriously harm your financial standing:
Banks and NBFCs may label you a high-risk borrower.
You may be denied credit cards, personal loans, or business loans.
In some cases, it may even affect job prospects, especially in finance-related roles.
Is Settlement a Good Option?
Settling the loan out of court is often faster and avoids prolonged legal trouble. However, remember:
The status will still reflect as “Settled,” not “Closed.”
A settled status indicates **partial repayment**, not full clearance, which still hurts your credit score.
Typical Timeline for Suit Filed Resolution
Court Proceedings: May take 30 to 45 days or longer, depending on the case.
Out-of-Court Settlement: Can be quicker and may be concluded within a few weeks.
The quicker you resolve the issue—either legally or by full repayment—the better it is for your credit profile.
Steps to Prevent a CIBIL Lawsuit
Make all loan and credit card payments on time and in full.
Communicate with lenders immediately if you’re facing financial hardship.
Seek restructuring or moratorium options when you’re unable to pay EMIs.
Monitor your credit report regularly to detect any errors or unauthorized loans.
Speak to the lender: Explain your situation and seek a resolution.
Dispute any errors: Contact us if you notice any inaccuracies in your credit report.
Seek legal advice: Understand your rights and options clearly with professional help.
Negotiate wisely: Aim for full repayment if possible; if not, negotiate terms with minimal credit damage.
Speak to the lender: Explain your situation and seek a resolution.
Dispute any errors: Contact us if you notice any inaccuracies in your credit report.
Seek legal advice: Understand your rights and options clearly with professional help.
Negotiate wisely: Aim for full repayment if possible; if not, negotiate terms with minimal credit damage.
Conclusion
Having a **“Suit Filed”** status on your CIBIL report is a significant blemish on your financial profile. It’s critical to **repay loans responsibly** and seek help early if you foresee repayment challenges. Whether you go for a legal defense or negotiate a settlement, take prompt and informed action to protect your credit health.
A lawsuit filed signifies that the lender has initiated legal proceedings against the borrower due to missed loan payments. These missed payments may arise from various factors, including intentional default or financial difficulties. Following the filing of the lawsuit, the lender informs CIBIL and other credit rating agencies about the legal action.
When CIBIL or any credit rating agency marks a loan as being subject to a lawsuit, the borrower is left with two choices: either to pay off the loan in full or to reach a settlement. To close the loan account, the borrower must make a complete payment of the outstanding balance to the lender, resulting in the loan status being updated to closed. It is advisable for the borrower to avoid opting for a one-time settlement with the lender. If a loan account is settled, CIBIL and other credit rating agencies will report it as settled, which adversely affects the CIBIL score and credit report. A settled status on a CIBIL report can lead to a decrease in the credit score.
Creditors or debt collectors may utilize the CIBIL lawsuit to recover overdue debts. The CIBIL report will show the loan associated with the lawsuit for seven years after it has been reported to CIBIL. This can significantly impact your ability to secure loans, credit cards, and other financial products.
You have the option to present your case in court by explaining your inability to repay the loan amount borrowed from the lender.
The ramifications of a person being labelled as a wilful defaulter are wide and drastic. Such declaration sounds the commercial death knell of the borrower in the sense that credit facilities would no longer be available to such borrower. Not only would such a borrower be deprived of credit facilities from banks and financial institutions but is likely to be also deprived of credit from any other person with whom it may be having financial / commercial dealings. The suppliers of goods and raw materials to such borrowers would stop supplying goods and raw materials on credit and would insist upon delivery against payment. Not only so, such declaration as a wilful defaulter, which is put in public domain, is also injurious to commercial goodwill and reputation of the borrower, likely to make anyone weary of dealing with the borrower. All this is likely to lead to cessation of the business of such a borrower
A CIBIL lawsuit appearing on your credit report for an extended duration can adversely affect your financial well-being. It may categorize you as a high-risk borrower, leading lenders to either deny your loan application or offer loans at elevated interest rates, or both. Additionally, it could hinder your chances of securing employment, renting a home, or obtaining approval for a mobile phone contract.
There is no official “defaulter list.” Instead, check your **CIBIL score and report** from the CIBIL website. It will reflect any defaults, missed payments, or suits filed.
The RBI doesn’t maintain a public defaulter list. Resolve any outstanding dues with your lender and obtain a **No Objection Certificate (NOC)**. Then, request the lender to update your status with CIBIL.
No, credit history cannot be deleted. However, negative marks fade with time, and consistent **on-time payments** can rebuild your score.
Regularly monitor your credit reports from **CIBIL, Experian, Equifax, and CRIF High Mark**. Any unauthorized loan will show up there. Report suspicious entries immediately.
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