How to Improve CIBIL Score After Default

If you have defaulted on a loan and your credit score has taken a hit, don’t worry. This article will tell you how to improve CIBIL score after default.

What Does it Mean to Default on a Loan?

Everyone goes through financial burdens sometimes and faces difficulty in paying EMIs on time. When you fail to repay your EMIs consistently and cannot repay the agreed-upon amount to the lender, it is referred to as a default.

Defaulting on a loan has severe consequences and negatively affects your credit score. When you default on a loan, the entry stays on your credit report for 7 years. If it is a secured loan, the lender may repossess the asset that you had pledged.

This might seem like a point of no return, but that is not the case. If you want to know how to improve CIBIL score after default, read ahead.

How Can I Improve My CIBIL Score After Default?

Here are the steps you can follow to improve your CIBIL score after you have defaulted on a loan - 

Create a Budget

Evaluate your financial situation, and create a realistic budget that can help you to manage financial obligations. Calculate your expenses, income, and outstanding debt so that you can set aside funds for debt repayments.

Pay Outstanding dues

If your lender has already marked you as a defaulter, reach out to them and offer to close the loan. This is a great way to change the status of a ‘default’ loan to ‘closed’.

Once you have paid it off, you can raise a dispute on the CIBIL website, and get your status updated. This will help you clear your CIBIL history and also improve your score.

Get an NOC

After you have reached out to your lender, and paid the outstanding dues, make sure to get an NOC or a No Objection Certificate. That will prove that you do not owe anything to the lender.

Starter Loans

Start rebuilding your credit history by applying for smaller loans. You might have to pay a higher rate of interest but making the payments on time will help you to build a positive credit score.

Pay Your Bills on Time

Pay all your credit card bills and loan EMIs in full within the respective due dates. Consistent on-time payments show lenders that you are financially responsible and can be trusted with credit.

Maintain Optimum Credit Utilization Ratio (CUR)

CUR is the ratio of credit utilized to the credit available to you. Keep your credit utilization ratio below 30% as high credit utilization can make you appear credit hungry. 

Monitor Your CIBIL Report

Check your CIBIL score regularly and notice if you see any change. Dispute any inaccuracies or errors you come across to avoid any negative impact on your CIBIL score.

Don’t Apply for Too Many Loans

Avoid applying for too many loans or making too many enquiries, if your CIBIL score is low. The more the number of enquiries, the more credit hungry you will appear.

Utilize Your Credit Cards

Don’t stop using your credit cards altogether. Instead, use them responsibly and spend only the amount that you will be able to pay off fully every month. 

What is a Good CIBIL Score to Have?

CIBIL scores are calculated on a range of 300 to 900, and a higher score is considered better. In general, a score of 700 and above is good enough for most credit products. 

Here is a detailed table that shows which is a good CIBIL score range to have -

CIBIL Score Range Creditworthiness

750 - 900


700 - 749


650 - 699


600 - 649

Needs Improvement

Below 600

Immediate Action Needed


A good credit score is crucial for accessing credit facilities on favorable terms. However, defaulting on a loan can significantly impact your creditworthiness. 

The good news is that with proactive steps and responsible financial behavior, you can rebuild your creditworthiness and improve your CIBIL score. But remember, it takes time and consistent responsible financial decisions to improve your credit score. 

How to Improve CIBIL Score After Default - Related FAQs

Clearing an old default loan might or might not impact your credit score highly.

A default listing stays on your credit report for approximately 7 years.

If the default was wrongly mentioned, it can be removed by raising a query. But if you actually defaulted on a loan, you cannot remove it from your credit history.

Yes, you can. Your CIBIL score depends on a majority of factors and not just payment delays.

It is difficult for a defaulter to get any kind of loan. But home loans are secured loans and the criteria required for it is fairly easy to meet.

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