Loans for CIBIL Defaulters

Personal loans are well-known for being versatile and easy to acquire as they do not require collateral. As there are no major restrictions on the purpose as well, personal loans can be availed for a variety of reasons ranging from paying bills to funding a vacation. However, despite the ease of procurement, there are certain conditions that prevent individuals from availing a personal loan easily and one of them is having a low credit score or if the applicant is a CIBIL defaulter

Ways to Avail Personal Loans for CIBIL Defaulters Online

CIBIL defaulter or defaulter of loan means or refers to an individual who has not repaid his/her loan installments. Doing so can also invite legal action for loan defaulters. Generally, as a solution, banks or other financial institutions upon discussion with the borrower can either increase the loan repayment tenure or increase the interest imposed on the loan. In extreme instances, the collateral provided (for home loans or auto loans) can also be seized. Additionally, all of this has a detrimental impact on the borrower’s credit score and makes it extremely hard for them to avail of another loan or credit card in the future.

However, the good news is that despite all of this there are options to avail loans for CIBIL defaulters. Some of these include:

  • Apply with a Co-signor or Guarantor
    Applying for a loan with the help of a guarantor or co-signor who has a high credit score mitigates the risk of loan default. However, it is important to ensure that the loan is repaid on time because the co-signor will also be affected negatively if this loan defaults as well.

  • Borrow at a Higher Rate of Interest
    Personal loans are generally more popularly procured as they do not require collateral. However, due to this factor, the rate of interest charged on personal loans is high. Personal loan defaulters or other defaulters can avail loans at a higher rate of interest than normal although this is not a recommended action. This is because it can be harmful to their finances and makes it harder to repay the loan amount.

  • Choose Loans that Accept a Collateral
    As opposed to the previous option, if the loan defaulter is in possession of collateral such as property or other fixed assets, this can be used to avail a loan as the risk is lower for the lender. However, in order to avoid the seizure of assets, this loan must be repaid on time at all costs.

  • Opt for Loans from Online Lenders
    Another option for personal loan defaulters or other loan defaulters to avail loans from is online lenders such as Money View that are usually a lot more lenient in the disbursement of loans and have different credit models and rates of interest. However, this is subject to the lender’s approval and can vary on a case-to-case basis.

  • Seek Other Lending Options
    Borrowers can explore other lending options such as peer-to-peer lending or withdrawing a part of their provident fund. Additionally, if the borrower’s salary is high enough, this can also be used to convince lenders to disburse loans to them

  • Work on Improving Credit Score
    Last but not the least, the most important step for loan defaulters to take is to improve their credit score. Check the section below for more information on the same. What do we mean by CIBIL defaulter? How does one’s credit score affect their eligibility? Read on to know more.

Who is Considered to Be a CIBIL defaulter?

Default in this context generally refers to missed monthly payments towards loans or credit cards for more than 30 days. A single default can cause a significant drop in the borrower’s credit score. While the term ‘CIBIL defaulter’ is neither used generally nor is there an official list of ‘CIBIL defaulters’, it can refer to those that have CIBIL scores less than 700.

TransUnion CIBIL which was formerly known as Credit Information Bureau (India) Limited is one of the premier credit information companies in the country with one of the largest collections of consumer information. This company was established in the year 2000 and primarily provides the CIBIL Report as well as the CIBIL score. While the CIBIL report is a consolidated report of the consumer’s credit activity, the CIBIL score is a three-digit numerical summary of the credit report. This score can range from 300 to 900 and any score above 750 implies that the individual is creditworthy and is most likely to repay loans and bills on time.

Each time an individual applies for a loan or a new credit card, their CIBIL score will be checked and if it is favorable, then he/she will be able to procure the said loan or credit card easily and on their terms. Therefore, it is important to ensure that one always has a high enough credit score.

However, there are instances wherein one is unable to or neglects their loan payments or indulges in behavior that is detrimental to their credit score. While building a credit score takes time, reducing it is unfortunately a faster process.

How to Improve and Maintain a High Credit Score?

There are multiple steps one can take to build up a good credit score. It is to be noted that past payments, as well as credit history, have a significant role to play in ensuring the same. Some of the steps that can be taken to maintain a high credit score are as follows:

  • Individuals must pay all their bills on time and in full if possible. Paying just the minimum balance due can be detrimental in the long run

  • The full balance of the credit card must not be used. Experts are of the opinion that utilizing 30% to a maximum of 50% of the credit limit is optimal

  • Individuals must ensure that their loan portfolio is a good mix of secured loans (auto loans, home loans) and unsecured loans (credit cards and personal loans)

  • In case individuals have acted as a co-signor for loans or as a guarantor, these accounts need to be monitored carefully. Ideally, one must not opt to act as a co-signor unless they have complete confidence and evidence that the borrower is able to repay the loan on time

  • Finally, individuals must also review their credit scores and credit history often to ensure that discrepancy, if any, are corrected immediately

How to Find out and Remove Your Name from the CIBIL Defaulter List?

As mentioned previously, an official CIBIL defaulter’s list does not exist. However, the only way to ensure that one is no longer considered to be a ‘CIBIL defaulter’ is to either ask for personal loan default settlement from the lender after fulfilling the necessary conditions or pay EMIs on time and gradually build up the credit score by following the tips mentioned above. Once the borrower has built up a good credit score, he/she can avail of loans a lot more easily.

Maintaining a good credit score is essential to avail loans, both secured and unsecured, easily. Whether one is a personal loan defaulter for a few months or a personal loan defaulter for 10 years, building back credit is essential. This also applies to other loans as well. Loan defaulters can avail loans through various means and in the meantime can focus on improving their credit score.