Any individual who repeatedly defaults on their loan repayment can fall within the defaulter category. Now, the RBI divides defaulters into two entities:
Wilful defaulters – These include beneficiaries who do not make timely EMI payments despite their ability to do so.
Non-wilful defaulters – These include beneficiaries who want to repay their loan but cannot do so due to any ongoing financial distress.
Either way, RBI mandates that financial institutions must prepare and send a defaulter list to CIBIL. Once CIBIL receives the defaulter list, they divide them further into not-suit filed and suit-filed accounts.
Having your name on the CIBIL defaulter list is unfortunate, as it becomes harder to get finance, especially home loans. However, all is not lost! Thankfully, there are ways through which individuals whose names feature on the CIBIL defaulters’ list can get housing finance approved. Here’s how:
1. Get your name off the list
The first thing for availing of housing finance is figuring out how to get your name off the CIBIL defaulters’ list. Know that your name is not a permanent feature on this list, and here are a few things you can do to take your name off it.
- Approach the financial institution you’ve defaulted on and negotiate an out-of-court settlement. If the lender hasn’t filed a suit against you, request for a more relaxed EMI repayment tenure if possible. The minute they receive the full amount you owe them, they will intimate CIBIL to take your name off the list.
- If your lender is not ok with an out-of-court settlement, both parties can go to court. Here, the lender or the judge might reassess the settlement amount, which then the borrower must pay. In any of the two scenarios, taking a home loan for CIBIL defaulters becomes possible the minute their name comes off the list.
Additional Read: What Is the Role of CIBIL Score in Getting a Home Loan?
2. Apply with a co-applicant
If you can’t get off the CIBIL defaulters’ list yet, file a joint housing finance application with your parents or spouse who has a good credit score. Doing this will significantly boost the chances of getting a housing loan for CIBIL defaulters, provided the co-applicant, in addition to a healthy CIBIL score, can also prove a steady stream of income.
3. Show high income and professional stability
Even if your name features in the CIBIL defaulters list, but presently, you have a sizeable income, you might fit certain lending institutions’ home loan eligibility criteria. However, along with a healthy income, you’ll also need to show proof of the source.
Simply put, proving that you have a high income without any professional stability may not sit well with lenders. So, furnish documents for both income and employment stability when applying for housing finance.
Additional Read: How much CIBIL Score Required for Home Loan
The bottom line
Want to apply for housing finance, but have a low CIBIL score? It’s still worth a shot at Tata Capital – one of India’s leading lending institutions. We offer finance at affordable home loan interest rates with negotiable repayment tenures and minimal documentation.
To know more about our housing finance offering or start an online application, click here.