Late payment on card can affect loan application

I had a fraudulent transaction of Rs21,500 on my credit card. Initially, I did not pay the amount as I was trying to resolve this with the credit card issuer. Later, I paid the amount when I learned that my account will get negatively reflected in Cibil. However, it appears that the credit card provider has reported me as a defaulter in Cibil. Now, I want to apply for a home loan. Can I get the loan?
The one basic element which will determine whether your credit history will reflect a default is the timing of your payment to the credit card company.
If you paid your  bill in full months after the dispute arose it is likely that your credit history will reflect that you did not pay on time. However, once you have paid the bill in full, your most recent “payment history” should reflect either “000” or “STD”. For example, if the disputed bill was raised in January 2010 and you paid the amount in May 2010, your payment history is likely to be reflected.

Though you have paid your dues in full, your credit history will only reflect that as per the date of payment. The fact that the bill was overdue for four months will continue to reflect on your credit information report (CIR) even after you have paid your bill. The lender is required by law to report your account details and the status of your payments to a credit bureau.

On the other hand, if you disputed your bill and paid it immediately, your CIR is likely to reflect no overdue payments. In this case, if the credit card provider mistakenly reported your account as overdue, it is easily rectified by following the “dispute resolution” procedure on the credit bureau’s website.

In your situation, it appears that you waited for sometime before paying your dues and hence, your late payment has been reported on your CIR. This is likely to negatively affect your home loan application as late payments are viewed negatively by lenders.
The best thing to do now is to continue paying your dues on time and re-build your “reputational collateral”. When you consistently make payments on time and your late payments move more into the past, loan providers are likely to view your application more favourably. 

The writer is senior vice-president - consumer relations, Cibil. You can reach him at creditwise@cibil.com.