Generic
by 5paisa Research Team Last Updated: 2023-07-17T11:25:41+05:30
Listen icon

Knowing your creditworthiness is crucial when it comes to financial matters such as loans, credit cards, or any other form of credit. In India, the Credit Information Bureau (India) Limited, commonly known as CIBIL, plays a significant role in assessing an individual's creditworthiness. While many people are aware of the importance of maintaining a good credit score, there is often confusion surrounding the concept of a CIBIL defaulter list.

In this blog, we will explore what is CIBIL defaulter list, exploring what it means, how it can impact your financial prospects, and most importantly, how to check CIBIL defaulter list.
 

What is a CIBIL defaulter list?

CIBIL defaulter list is often misunderstood as a separate list maintained by banks or credit bodies. However, there is no such specific list. Instead, credit companies collect and maintain comprehensive data on borrower’s repayment performance across various types of credit. This data includes timely payments and defaulted payments, which impact the borrower's credit score.

While credit bureaus like CIBIL do not maintain a list of loan defaulters, the Reserve Bank of India (RBI) does maintain a list of "wilful defaulters." These are individuals who owe Rs. 25 lakhs or more to financial institutions such as banks or non-banking financial companies (NBFCs) within the country. The list of wilful defaulters is publicly available to ensure that financial institutions exercise due diligence before granting loans to such individuals in the future. 
 

How To Check Your Name in CIBIL Defaulter List?

Checking for your name on the CIBIL defaulter list is unnecessary because no such list exists. Instead, lenders evaluate your CIBIL Score when reviewing your loan application. A credit score of 750 or above enhances the likelihood of instant loan approval, while a lower score increases the chances of rejection. However, having a track record of loan defaults in your credit report significantly diminishes your loan approval prospects. To prevent being labeled as a CIBIL defaulter and to enhance your chances of securing loans in the future, maintaining a good credit score and ensuring a clean repayment record are vital.

Lender’s Action on your Credit Applications

When you apply for a loan, the bank or NBFC will ask for your credit report from credit bureaus like TransUnion CIBIL, Equifax, Experian, or CRIF High Mark. They do this to check if you are trustworthy and can repay the loan. If you are a CIBIL defaulter or have a low credit score, the lender may say no to giving you money. They will look at your records of missed, late, or unpaid payments. This is also important when you apply for a credit card from a bank. To have a better chance of getting approved for loans or credit cards, it's important to have a good track record of paying your debts on time.

Maintaining a Good Credit Score

Maintaining a good credit score is essential since there is no specific  CIBIL defaulter list. To increase your chances of loan approval, work on improving your credit score, aiming for a range above 750 and closer to 900 for a smooth loan process. To achieve this, focus on two key aspects:

1.    Make timely repayments

Never delay or skip payments for loans or credit cards. Timely payments positively impact your credit score, showcasing responsible credit behavior and improving your credit profile.

2.    Manage credit utilization

Be cautious of how much credit you use compared to your credit limits. Wise credit card usage and on-time payments positively influence your credit score.

Additionally, clear any overdue payments and avoid settling accounts, as this may negatively affect your credit score. Negotiate with lenders to find an affordable repayment plan.
 

Steps for Maintaining a Good Credit Score

Building and maintaining a good credit score is crucial for financial stability. To ensure a healthy credit profile, follow these three steps:

1.    Use credit cards wisely

Use your credit cards responsibly, avoiding excessive spending and staying well within your credit limit.

2.    Responsible Payment Habits

Ensure that all your credit obligations, including credit card bills and loan installments, are paid on time to avoid negative impacts on your credit score.

3.    Manage your credit accounts

Consider having only the necessary number of credit cards and loans. Being mindful of your credit utilization and keeping a balanced mix of credit can contribute to a stronger credit profile.

By implementing these steps, you can establish a solid foundation for a good credit score and enjoy better financial opportunities in the long run.
 

Loan Process for CIBIL Defaulter

Even if you are a CIBIL defaulter, there are alternative ways to get a loan. Consider these options:

1.    Salary-Based Approval

If you have a good salary, lenders may approve your loan application regardless of your CIBIL score. Your income can outweigh the negative credit history.

2.    Spouse's CIBIL Score

If your credit score is poor but your spouse has a good score, you can still get a loan. Lenders may consider your spouse's positive credit history and approve your application.

3.    Specialized Credit Institutions

Some lenders specialize in providing loans to individuals with bad CIBIL scores. However, be aware that they may charge higher interest rates for this service.

4.    Peer-to-Peer Lending

Peer-to-peer lending is becoming popular in India. It involves borrowing from individuals rather than traditional banks. Keep in mind that interest rates may be higher, and loan amounts may be smaller.
 

How Does the CIBIL Defaulter Status Affect Loan Approval

The CIBIL defaulter status can significantly affect loan approval. When reported as a defaulter, your credit report shows a negative impact on your CIBIL score. Getting future loans, especially unsecured ones, becomes challenging with a low score, and if approved, you may face high interest rates.

How to Remove Your Name From CIBIL Defaulter List?

There is no official CIBIL defaulter list. However, if a financial institution marks you as a CIBIL defaulter, you can take the following steps to improve your credit status and potentially get your name removed:

●    Examination of Your Credit Report

Begin by carefully reviewing your credit history. This will help you identify any mistakes or inaccuracies in the report. Ensure that all the information in your credit report is correct and up-to-date.

●    Clear Off Your Dues 

To improve your credit report, focus on clearing all outstanding debts. If you face financial limitations, talk to your lenders in advance and try to work out a feasible solution. Once you have settled your dues, wait for at least three months before checking your credit report again.

●    Pay in Time

Late payments of loans or credit card installments can significantly impact your credit history. To improve your credit score or maintain a good one, make sure to pay your monthly installments before the due date consistently.

●    Spend as Per Your Credit Limit 

Keep your credit utilization in check by spending no more than 30% of your credit limit. This responsible credit usage can help maintain a healthy credit score.

●    Take Loans One at a Time

Avoid applying for multiple loans simultaneously, as it may signal credit hunger to lenders. Additionally, avoid applying for short-term loans frequently. Instead, focus on applying for one loan at a time, increasing your chances of loan approval and ensuring smoother repayment.
 

What to do if your name is still in CIBIL defaulter list?

If your name is still on the CIBIL defaulter list, there are a few steps you can take. First, check your credit report for any errors in your personal details such as name, date of birth, PAN number, and address. Correcting these inaccuracies can help resolve the issue. Additionally, late or incomplete payments on monthly EMIs often make you a CIBIL defaulter. To avoid this, make sure to make timely and complete payments towards your debts. By taking these actions, you can work towards removing your name from the CIBIL defaulter list and improving your credit status.

Conclusion

It is crucial to understand the implications of being listed as a CIBIL defaulter or having a poor credit report. The absence of an official CIBIL defaulter list does not mean that your credit history doesn't matter. Checking your credit report regularly is essential to ensure that you are not denied loans or credit opportunities. By maintaining a good credit score, making timely payments, and addressing any outstanding dues, you can improve your creditworthiness and increase your chances of obtaining loans and credit on favorable terms.

Open Free Demat Account

Resend OTP
Please Enter OTP

By proceeding, you agree to the T&C.

More About Generic

Frequently Asked Questions

Credit repair entails rectifying mistakes and inaccuracies present in your credit report that can potentially harm your creditworthiness. Its objective is to enhance your credit history by eliminating any unjust or erroneous data that may exist.

CIBIL keeps track of defaulters for a minimum of 7 years from the date of the first late report. It is important to note that CIBIL does not have the authority to delete or modify these records.

There is no specific CIBIL defaulter list, but if your loan is rejected due to a poor CIBIL score, you can take steps to improve your creditworthiness. Start by clearing off your outstanding dues, as settling them can help remove the default status from your Credit Information Report. This process typically takes around one to two months. If the record is not updated, you can file a grievance with CIBIL or escalate the matter to the RBI.

Having a good credit score is vital for loan approval. If your credit score is 750 or above, your chances of getting a loan are higher. However, if you have a history of defaults, it significantly reduces your chances of loan approval. Lenders consider creditworthiness as a key factor in granting loans.

The time required to rebuild credit after a loan settlement varies depending on various factors such as your credit profile, creditworthiness, and past credit history. There is no fixed timeline for credit rebuilding after a loan settlement. It requires responsible financial behavior, timely payments, and building a positive credit history over time to regain a good credit standing.