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How Many Years will CIBIL Keep Record of Defaulters?

Published on Apr 3, 2024Updated on Apr 5, 2024

How Many Years will CIBIL Keep Record of Defaulters?

CIBIL keeps track of defaulters for a period of 7 years, starting from the date the first default was reported.

But what exactly is the CIBIL defaulter list? How can you end up on it? More importantly, can you get your name off the list? Does the CIBIL defaulter list affect your loan application?

We’ll answer all these questions in this article, along with some of the best practices to avoid ending up on the CIBIL defaulter list.

What is CIBIL?

CIBIL, or Credit Information Bureau (India) Limited is one of the leading credit information companies in India. It maintains a record of your financial history, including your repayments on credit cards or loans and any outstanding loan amounts. All these details are available in a report that can be downloaded from the CIBIL website.

In addition to creating a credit report, CIBIL also generates a credit score. It is a 3-digit value that reflects your creditworthiness. A higher score indicates responsible credit behaviour while a lower score can be a result of defaults or missed payments.

Lending institutions use this information to make decisions on approving or rejecting your loan application, and decide the appropriate interest rate.

What is the CIBIL Defaulter List?

Contrary to the common belief, CIBIL does not maintain a specific list of loan defaulters. As seen in the above section, they only keep track of borrowing history including any defaults.

When you apply for a personal loan, the lender will look at this data to evaluate your profile. Even a single missed payment can have a negative impact on your credit score.

Must Read:What is CIBIL Score & Report?

How can I avoid being on the CIBIL Defaulter List?

Maintaining responsible credit habits is key to avoiding a default being reflected on your CIBIL report. Here are some ways to keep your CIBIL record clean:

1. Regularly Check your CIBIL Credit Report

This will help you spot any errors or discrepancies early on and take corrective action. Get in touch with the CIBIL dispute resolution unit in case of any inaccuracies. Please note that you can check the credit report for free once every year. A paid account will let you access the report more times in a year.

2. Pay your Credit Card Bills on Time

Late or missed payments will reflect on your CIBIL report, leading to a decrease in the score. This will raise a red flag with lenders when it is time to assess your creditworthiness. It is recommended to set up payment reminders or automate credit card payments. If you go for the latter option, please ensure that you maintain sufficient funds in your account to avoid overdraft charges.

3. Do not Take out Multiple Loans

Taking out multiple loans may indicate that you are in severe need of credit. Moreover, it can become difficult to manage multiple EMI payments on time. This can lead to a default and ultimately lower your credit score.

For How Many Years does CIBIL keep track of Defaulters?

The details of loan default will stay on your CIBIL credit report for a 7-year window, starting from the date when the first default was reported. During this time, your creditworthiness can be negatively impacted when you apply for loans.

How to Remove your Name from the CIBIL Defaulter List?

Since there is no specific “CIBIL defaulter list”, your name cannot be removed from it. If a default ends up on your CIBIL report, it is essential that you take prompt action to improve your credit history. This will help you mitigate any long-term effects of the default. Here’s how to improve CIBIL score after default:

  • Clear the outstanding due: Once you clear the debt, your CIBIL report will be revised with this information. If the overdue amount cannot be paid in full, consider negotiating a settlement with the lender. This will demonstrate your commitment to resolving any issue promptly.
  • Dispute resolution: If you believe that you have been incorrectly listed as a defaulter, raise a dispute with CIBIL. Be sure to keep supporting documents ready.
  • Build a good credit history: Going forward, work on consistently making timely payments and try to keep credit utilisation under control.

Does the CIBIL Defaulter Status Affect Loan Approval?

Yes, being reflected as a CIBIL defaulter can affect your loan approval. Lending institutions may view you as a high-risk borrower and offer high-interest rates. However, some lenders may be more lenient if the default is an old one and you otherwise have a history of timely repayments.

Personal Loan Process for CIBIL defaulter

The CIBIL score required for personal loans with most lenders is 750. If you have a loan default, it is likely that you have a lower credit score. While getting an urgent personal loan with a low score is challenging, it does not have to be impossible. Here are some options to consider:

  • Non-Banking Financial Companies (NBFCs): These institutions may understand your unique position, especially if you have a genuine reason for the default. They also have more flexible criteria compared to traditional financial institutions.
  • Get a co-applicant: Having a co-applicant with a strong credit score may improve your chances of loan approval.

At SMFG India Credit, a minimum CIBIL score of 750 is required for a personal loan. It is recommended to enhance your CIBIL score to 750 before approaching any financial institution for a loan. In case of emergencies, you can consider having a close family member with a stable income and good CIBIL score as the primary applicant.

Must Read:What Is The Eligibility For Joint Personal Loans?

How does Maintaining a Good Credit History Positively Impact Loan Eligibility and Interest Rates?

Maintaining a good credit history is crucial when it comes to personal loans as it directly impacts personal loan eligibility and interest rates. When you have a positive credit history and a high credit score, lenders perceive you as a trustworthy borrower. This significantly increases your chances of getting loan approval from financial institutions.

Moreover, a good credit history puts you in a strong position to negotiate more favorable terms for your personal loan. Lenders are more likely to offer you lower interest rates, which can save you money over the life of the loan. Additionally, you may have the opportunity to secure a flexible repayment schedule that aligns with your financial capabilities.

Another advantage of maintaining a good credit history is that it can potentially lead to higher loan amounts. Lenders are more willing to grant larger loan amounts to individuals with a proven track record of responsible debt management.

By maintaining a positive credit history, you can streamline the loan approval process and gain access to funds more quickly. Lenders are more likely to view you as a reliable borrower, which can expedite the loan application and approval process.

Remember, it's important to consistently manage your debts and make timely payments to maintain a good credit history. This will not only increase your chances of loan approval but also open doors to more favorable terms and conditions.

Conclusion

While there is no “CIBIL defaulter list”, a loan default will be reflected on your CIBIL report and stay there for up to 7 years. This will lower your credit score and ultimately lower your chances of getting a loan with favourable terms. If you have a default on your report, it is necessary to assess the cause and take immediate steps to improve your credit history. These may include paying the outstanding amount or raising a dispute with CIBIL if the default is due to an error. Good credit behaviour like checking CIBIL reports regularly, making timely repayments, and not taking out multiple loans will help you avoid being a defaulter. It will also help maintain a strong credit score.

SMFG India Credit provides personal loans to borrowers with a credit score of 750 and above, as long as they meet other eligibility criteria. The personal loan interest rates are as low as 11.99%* per annum and the repayment tenure is flexible. Our online application process and short disbursal times ensure that you get quick and easy access to funds.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

FAQs

What happens to the CIBIL score after 7 years?

Any negative information related to defaults or missed payments falls off your CIBIL credit report. Once this happens, you have a good chance of improving your credit score if you practice responsible credit behaviour.

Is it true that after 7 years your credit is clear in India?

While it is true that negative information related to defaults will be cleared after 7 years, it does not mean that your credit is automatically clean. If you have an unpaid debt after 7 years, you still owe the lender. Also, certain types of information such as bankruptcies may stay on longer.

How can I delete my CIBIL history?

You cannot directly delete your CIBIL history. If you find any errors in your report, you can raise a dispute with CIBIL to get it corrected. In other cases, CIBIL will hold accurate information on your credit history for 7 years. After this period, details of loan defaults and missed payments will be removed, giving you a chance to build a positive credit history.

Can we remove the write-off from CIBIL?

To remove the written-off status, you need to pay the outstanding amount in full or come to a mutual agreement with the lender. Once this is done, they can update this information on your CIBIL report. You can also request a No Due Certificate from your lender to prove that you do not have any outstanding debt. If the written-off status is not updated, raise a dispute with CIBIL.

How can I check my defaulters list in CIBIL?

There is no actual “CIBIL defaulters list”, as the company only compiles credit information obtained from financial institutions and lenders. You can request your report and credit score on the official CIBIL website, which will show any information related to loan defaults.

What is CIBIL cleanup?

There is no single action that you can take for a “CIBIL cleanup”. It generally means maintaining a good CIBIL report and score. Here are some ways you can do this:

  • Paying off outstanding debts and getting the “written-off” status removed from CIBIL.
  • Regularly check your CIBIL report and file a dispute with CIBIL if you find any errors.
  • Develop good credit habits such as – making timely payments on credit cards or loans, maintaining a low credit utitlisation ratio, and not taking out multiple loans at the same time.

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