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How many Years will CIBIL Keep Record of Defaulters?

How many Years will CIBIL Keep Record of Defaulters?

finance
July 24, 2022
5 min read
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How many Years will CIBIL Keep Record of Defaulters?
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Missing repayment dates are missed for loans and credit cards will lead in your name getting listed in the record of defaulters. CIBIL credit score is an important factor when it comes to accessing credit products. And if you miss repaying your credit card debt or loan that you had taken on, the record will stay on your CIBIL credit report for a specific time period. Having a stain on your credit report will also influence your CIBIL credit score. 

Every credit bureau maintains a record of individuals who have ever taken a loan or credit card. A CIBIL credit report contains all the details of your financial activities that help lenders or financial institutions to gauge the type of borrower you are. Basis on the available information in the credit report, they make a decision whether to extend a credit line to you. Hence, it is essential to keep your CIBIL credit report clean. 

What is a CIBIL Defaulter’s List?

CIBIL do not maintain a defaulter’s list. The Reserve Bank of India maintains a list of defaulters. The list is available to general public for access on their official website. From time to time, the Reserve Bank of India introduces new framework to establish a stringent and fair financial operation system in the nation. In April 1997, the regulatory body introduced a scheme under which all the banks and financial institutions were notified to submit the details of wilful defaulters with outstandings of Rs.25 Lakhs and above. 

Depending on the conditions that led to the default, the RBI has classified the list of defaulters into two groups: willful and non-wilful defaulters. This was designed to identify those who were actually drowning in debt and those who were purposefully choosing not to pay it off.

CIBIL will recognise you as a defaulter if your name is on that list due to non-payment of your dues. 

For How many Years does CIBIL Keep a Track of Defaulters?

7 years from the last date of report. CIBIL collects and keep all the available information on an individual’s financial history. It helps banks, NBFCs, and other lenders to assess the creditworthiness of a potential borrower. Remember that CIBIL or any other credit bureau cannot delete your name from the defaulter’s list. Thus, if your name is on the defaulter’s list, you should work towards improving your CIBIL credit score. 

Does the CIBIL Defaulter Status Affect Loan Approval?

Yes. Whenever a lender marks you as a defaulter, the same gets updated with CIBIL and your CIBIL credit score goes for a toss. With a low CIBIL credit score, it will become extremely challenging for you to get a loan, especially personal loan. There might be lenders who will want to approve your loan application, but the interest rates may be exorbitant. It is always a wise financial decision to keep a tab on your CIBIL credit score and help it improve. 

How to Avoid Getting Listed as a CIBIL Defaulter?

When you apply for a loan or any other line of credit, the lending company checks your CIBIL credit report and score to see if there are any red flags on your name. You must constantly work towards increasing your credit score to prevent being shown as a defaulter in the CIBIL credit report. 

Here are a few tips on how to keep your CIBIL credit record spotless: 

Regularly Check your CIBIL Credit Report

To keep track of your credit score, make sure you routinely check your CIBIL credit report for any inaccuracies. If there is an error, try to identify the causes and raise it to CIBIL. You can get in touch with CIBIL using the information on their website if you find any mistake in the report.

Pay your Credit Card Bills on Time

Whether its your credit card or your loan, ensure you make timely repayments against the debt. One of the main reasons of having a low CIBIL credit score is missed or late payments. When you apply for a credit card or a loan, the lender checks your credit profile; if it shows a "Settled" or "Written-Off" status, it raises questions about your trustworthiness and increases the likelihood that your loan application will be turned down.

Do not Take out Multiple Loans

Never submit multiple loan applications simultaneously because this indicates that you are in a severe need of credit. Refrain from applying for loans of any kind, even those with short terms, as even this activity casts doubt on your trustworthiness as a borrower. Apply for one loan at a time as it improves your chances of having your loan application accepted and makes managing the payments simple. 

FAQs Related to CIBIL Defaulter’s List

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Can I get a home loan if I am in CIBIL defaulter’s list?

First of all, CIBIL doesn’t have a defaulter’s list of their own. They extract the information on the defaults made by an individual from the defaulter’s list available with the Reserve Bank of India. A CIBIL defaulter can still get a home loan, however, keep in mind that the bank or the lender may charge you a high rate of interest for the loan. 

How can I remove my name from CIBIL defaulter’s list?

To remove your name as a defaulter from CIBIL record, you will need to work on your credit history. Identify the reason your name is on the defaulter list. If you have had failed to repay any loan or credit card, your name will be on the list. Contact the bank or lender and come to an arrangement to pay off the debt. Once you clear the debt, the same will get reflected in the defaulter’s list and your CIBIL credit report will be revised accordingly. 

How to improve CIBIL credit score if I have defaulted a loan?

If you are a defaulter, you can improve your CIBIL credit score by repaying the debt. Repay the debt and your CIBIL credit score will improve by a few points. Further, you can make a few transactions from your credit card and repay it on time to build your credit score.