Many people aspire to be homeowners. However, most of us cannot achieve our goals with our current savings and annual income. So, what are your options? Simply take out a home loan to achieve your objective. Having a good credit/CIBIL score is the most important criterion for getting a home loan. If you don’t pay your current loan EMIs or credit card bills on time, you’ll be labelled a CIBIL defaulter with a very low credit score. A CIBIL defaulter will have a difficult time getting a home loan. CIBIL defaulters are seen as high-risk borrowers, and banks are hesitant to lend to them.
Home Loan for CIBIL Defaulters
It will be difficult to obtain a home loan if you have a CIBIL default. As a result, you must first and foremost improve your credit score.
Here are some essential steps that CIBIL defaulters must take to get a home loan.
Any outstanding loan EMIs or credit card debts must be paid off. This will raise your credit score and make it easier for you to get a mortgage.
To be eligible for a loan, you must receive a NOC, or No Objection Certificate, from the bank after you have completed your loan repayment.
Banks will charge a higher interest rate to a CIBIL defaulter on a home loan.
If a CIBIL defaulter earns a good income, he may be eligible for a home loan. Higher-income individuals are thought to have a greater ability to repay debt.
Obtaining a home loan for CIBIL defaulters is becoming increasingly difficult. As a result, he can apply for a home loan with his credit-worthy spouse as a co-applicant.
Who Is a CIBIL Defaulter?
Let’s define what a CIBIL defaulter is before we discuss how to remove it.
In 1994, the Reserve Bank of India set up a system for storing defaulter information (for loans of Rs 1 crore or more) and communicating it to banks and financial institutions on demand. The RBI later increased the restriction to include loans of RS. 25 lakhs or more in 1999.
However, there is no such thing as a “defaulter list,” and credit bureaus do not share such information.
So, what is a CIBIL defaulter, and why do we need to know how to remove them from the list?
Being on the CIBIL defaulter list today is the equivalent of having a bad credit score. That is to say, a CIBIL defaulter is someone who has a low credit score. Their loan application was turned down not because they were on a “defaulter list,” but because they had a poor credit score.
Poor repayment history leads to a low credit score. If a person has previously missed deadlines or made late payments on loans or credit cards, their lenders and banks will have reported their repayment behavior to CIBIL, which will be included in their credit report.
How Can CIBIL Defaulters Get a Home Loan?
Even though defaulters have a difficult time getting a home loan, credit against a bad CIBIL score is still possible. In this scenario, borrowers must also demonstrate their creditworthiness and meet the other eligibility requirements. Individuals with a low CIBIL score may be eligible for a home loan from Home First Finance if they meet all of the other eligibility requirements.
Ways to Get a Home Loan with a Low Credit Score
The Best Ways to Get a Home Loan Regardless of Your Credit Score
Make a small loan request.
Select a higher tenor.
Pledge a property with a high market value right now.
Select a combined home loan for a borrower with a high CIBIL score.
Even though getting a home loan without a CIBIL score is difficult, following these guidelines can improve your chances significantly.
How to Remove Name from CIBIL Defaulter List?
Borrowers who have previously defaulted can approach the financial institution and agree to pay the amount owed in an “out-of-court” settlement. However, in such cases, the financial institution will only remove the case after receiving the full amount. They will notify CIBIL of the transaction when they receive it, and the individual’s name will be removed from the list. Keep in mind, however, that the account would be marked as ‘settled’ for the next 7 years in this case.
In another situation, a person is required to appear in court and explain why they defaulted. A lender may then offer a settlement sum that they must pay at all costs. Because CIBIL defaulters cannot obtain a home loan, the best solution is to manage debt responsibly and prudently.