Financial crises can hit at any time, regardless of circumstances, and individuals with extremely low credit scores may need to avail of urgent CIBIL defaulter loans. To obtain an urgent loan for CIBIL defaulters, individuals must take steps such as applying with a co-signer, using collateral to secure the loan, improving their credit scores, and exploring alternative options.
While loans for individuals with low credit scores can sometimes seem challenging to obtain, it is still possible to secure them. In this article, we will go over what CIBIL is, who CIBIL defaulters are, and what challenges they may face. We also cover the steps one must take to avail of personal loans for CIBIL defaulters. So if you are looking for an instant loan, why not try Tata Capital? We offer loans at competitive interest rates with minimal documentation.
What are CIBIL defaulters?
In some cases, individuals may not be able to repay loans they have availed of. In such a situation, they may be labelled as CIBIL (The Credit Information Bureau (India) Limited) defaulters. However, it is essential to note that there is no standardized definition for CIBIL defaulters, and CIBIL does not maintain any lists or data specifically regarding defaulters. Instead, lenders usually review your credit/CIBIL score, to estimate your creditworthiness and approve your loan.
Who is considered to be a credit defaulter?
When you are unable to meet your loan repayment commitments, there is a risk of being labelled a credit defaulter. Credit rating agencies don’t keep an official list of defaulters. Instead, they assess your creditworthiness based on your credit score, which influences your loan approvals.
A credit report reflects your financial discipline, which lenders use to measure your creditworthiness. Late payments can seriously hurt your credit score.
Defaulting on loans lands you on the credit defaulter list, indicating a low credit score. As a result, you could face ongoing challenges such as lenders declining future credit applications which can restrict your financial freedom over an extended period.
Available loan types for CIBIL defaulters in India
Finding a loan for defaulters in India can be challenging, but there are options available:
Gold loan: A gold loan can be a viable option when seeking a loan for CIBIL defaulters. You can pledge gold jewelry, coins, or bars as collateral. Lenders usually do not check your CIBIL score, which makes this a quick option.
Loans with a co-applicant: Some lenders provide a loan for CIBIL defaulters if you have a trustworthy co-applicant. This increases your chances of approval despite a poor credit history.
Loan Against Property (LAP): Residential or commercial property can be used as collateral to get a loan for CIBIL defaulters. LAP offers higher loan amounts and longer repayment tenures.
Loan against securities: Investments in mutual funds, stocks, insurance policies, or other similar assets can be leveraged to obtain a loan for CIBIL defaulters.
How to secure an urgent loan with low or bad CIBIL score in India?
Lenders might be apprehensive about offering urgent loans to CIBIL defaulters, so you must consider a few options to increase your chances of getting a loan. These options include:
Apply with a co-signer: When you apply with a co-signer or guarantor with a high credit score, your chances of getting loan approval increases. It’s because they have a higher credit score which minimizes the risk of your application being rejected.
Borrow at higher rates of interest: As you have a poor CIBIL score, lenders will not entertain your loan application easily. However, taking a loan at higher interest rates may offset the risk.
Use collateral to apply for loans: If you have any physical asset to use as collateral, lenders can be more open to offering loans. However, keep in mind that they may seize the property in case of non-repayment of loan.
Try to improve your credit score: If you have existing debt, focus on making timely repayments. Consistent on-time payments can boost your credit score, improving your chances of securing loan approvals in the future.
Explore other alternative options: If other options haven’t worked out well, consider taking a more traditional route such as peer-to-peer lending, where you can borrow money from acquaintances or friends through informal agreements
Step-by-step guide to applying for instant loan for CIBIL defaulters online
Here’s a step-by-step process of how to get urgent loans for CIBIL defaulters online.
Identify Lenders for CIBIL Defaulters: Due to low credit scores, certain lenders may not offer urgent loans to CIBIL defaulters. But that doesn’t mean that every lender is against providing loans to them. That’s why you must research properly to see which lenders offer loans and which don’t.
Eligibility Criteria: To apply for a personal loan with a low credit score, you’ll have to meet the following eligibility criteria-
The applicant must be between 21 and 58 years of age
The applicant must have a minimum monthly income of Rs. 15,000
The applicant must have a minimum of one year of work experience. Additionally, don’t forget to check for the interest rate, tenure, and other loan terms offered by the lender.
Once you know the lenders offering loans for low credit scores, the next step is to see what criteria they have set. But be aware that since you are applying as a CIBIL defaulter, there may also be other criteria, so look carefully.
Also, check their personal loan interest rates, tenures, and other important terms and conditions you find necessary.
Required Documents: The lender will require you to submit a set of required documents. Make sure to collect the following documents and keep them updated-
ID proof (Aadhaar card/ Passport/ Driving license/ Voter ID)
A copy of your salary slips for the last two months
A copy of your bank statement for the last two months
A certificate stating one year of continuous employment
Apply Online: Once you have all the required documents, go to the lender’s website and fill out the application form. You will be required to fill in details like your name, address, loan needs, etc.
Wait for Verification: Upon filling out the application, upload your documents. After this, the lender will verify your application and submitted documents. Once they are satisfied, they will approve your loan application. If not, you’ll have a list of reasons to check for resubmission.
Alternatives to a personal loan for a low CIBIL score
Here are some alternatives to a personal loan for CIBIL defaulters:
Loan against Fixed Deposits (FDs): You can get a low credit score loan by pledging your FD. Your deposit will continue to earn interest, while the loan will offer you funds upfront.
Loan against insurance policies: Certain life insurance policies allow you to borrow against them. This is a practical alternative to a personal loan for CIBIL defaulters.
Gold loan: Gold jewelry, coins, or bars can be pledged for a quick, low credit score loan. The loan amount depends on gold purity and weight.
Loan against shares: Banks may offer a personal loan for CIBIL defaulters by accepting listed shares as collateral, based on their market value.
Loan against a Public Provident Fund (PPF): A PPF loan lets you raise money without breaking your PPF account. This is another useful low credit score loan option.
Challenges for securing a loan for CIBIL defaulters
While it is not impossible for individuals to secure loans for low credit scores, those with a poor credit history often encounter multiple hurdles when applying for loans. Here are some common problems faced by CIBIL defaulters:
Higher rates of interest: A poor credit score often leads to higher interest rates. Lenders consider those who have defaulted in past repayments as risky borrowers. As a safeguard against risk, financial institutions typically charge extra interest to offset the possibility of default. This makes borrowing money more expensive and difficult for defaulters.
Strict loan terms: In addition to increased interest rates, lending to CIBIL defaulters typically comes with more stringent loan conditions. These include shorter loan tenure, smaller principal amount, and limitations regarding its use. These terms are designed to minimize the lender’s risk but often restrict the flexibility and affordability of credit options for borrowers.
Fewer lender options: Limited borrowing options can be discouraging for individuals struggling with low credit scores. Most lenders avoid offering loans to clients with low or poor credit ratings. As a result, they may have to rely on alternative sources that come with higher costs and stricter loan terms, further complicating their finances.
Security requirement: In some cases, offering significant collateral can convince financial institutions to approve a loan for CIBIL defaulters. Collateral can include assets like houses, cars, or other valuables, which the lender can seize if you default on repayment. Such conditions exclude many defaulters from obtaining loans, especially those without significant assets to pledge.
Effects on future financial opportunities: For individuals flagged as CIBIL defaulters, obtaining a loan doesn’t mean their challenges are over. It may also impact your ability to secure future loans, obtain credit cards, and access favorable terms on other financial products.
CIBIL score ranges and loan approval chances
CIBIL score
Creditworthiness
Probability of approval
<600
Requires attention
Low
600-649
Uncertain
Challenging
650-699
Satisfactory
Possible
700-749
Good
High
750-900
Excellent
Very high
How to increase CIBIL score fast for urgent loan eligibility?
Getting a loan can be challenging if you have a low CIBIL score. However, there are few steps you can take to improve your credit score and boost your chances of loan approval. These include:
Monitor your credit report frequently: Start by requesting and reviewing your credit report regularly. It gives you crucial insights into the factors that influence your score and helps you spot and fix any mistakes which can boost your rating quickly.
Clear your outstanding dues: These may include outstanding credit card bills or existing loans. Make timely payments by setting regular reminders. If you are a defaulter, consolidating your debts can make repayments more manageable.
Maintain a low credit utilization: Aim to keep your credit utilization below 30% of your total limit. Using less of your available credit makes you look financially stable and responsible in the eyes of lenders.
Avoid acquiring multiple loans: When you apply for a loan, lenders perform a hard inquiry on your credit report, which can temporarily lower your credit score. Do thorough research before applying for new loans to check your eligibility for them.
Diversify your credit: Having a diversified mix of loans, such as home loans, and unsecured loans, such as personal loans, can help you boost your credit score. A mixture of loans shows the lenders your ability to responsibly manage different types of credit, thereby making you a potentially low-risk borrower.
Boost your credit history: Maintaining a long and consistent credit history reflects positively on your credit score. If you have older credit accounts that are duly paid off, do not close them as they reflect your long-term track record of handling credit responsibly.
Seek professional debt counselling: If you’re struggling to handle your debts, consider getting help from a professional debt counsellor. They offer practical plans and strategies to help you manage your debts and gradually improve your credit score.
Key factors affecting your CIBIL score in India
Applying for your CIBIL score can be an anxiety-inducing process- you don’t know if you will receive a high or low score. If you receive a high score, you can rejoice since your chances of getting approval for loans are high. But what if you receive a low score?
The first step is to understand the factors that may have contributed to this low score to begin with:
Your application: If you have sent multiple loan applications to lending institutions, it could negatively impact your CIBIL score.
A high number of unsecured loans: If you have borrowed multiple loans against your name, it could be another factor that lowers your CIBIL score.
Delaying and defaulting payments: If you have defaulted on payments for your loan EMIs or credit cards, this will negatively impact your credit score.
Someone else defaulting on payments: In case you have agreed to be a guarantor for someone else, it could affect your credit score. If they default on their loan EMI payments, it will negatively impact your credit score.
Tips for urgent loan approval when you have a bad credit report
Here are some tips on how to get a personal loan for CIBIL defaulters quickly:
Apply for a smaller amount: Requesting a lower amount reduces risk for lenders and improves approval odds for a personal loan for a CIBIL defaulter.
Use mobile apps or NBFC platforms: Digital lenders and NBFCs may be more flexible, which makes them a good option for an urgent loan for CIBIL defaulters.
Apply with a co-applicant: A co-applicant with a good credit score can boost eligibility for a loan for CIBIL defaulters.
Offer collateral: Pledging gold, stocks, FDs, or property strengthens your case for a personal loan for a CIBIL defaulter.
Show regular income proof: Salary slips or business income help lenders trust your repayment ability and speed up approval.
Risks and precautions for CIBIL defaulters seeking a loan
While applying for an offline or online loan for CIBIL defaulters, it is important to proceed carefully. A major risk you can run is irregular income. So, try to maintain and show steady earnings to the lender to improve your chances of approval for a low credit score loan.
Make sure to keep your credit utilization below 30% of your total limit. This shows financial discipline and makes you appear more reliable to lenders offering an online loan for CIBIL defaulters.
It is also important to avoid applying for multiple loans at once. Each application triggers a hard inquiry, which can temporarily reduce your credit score and affect eligibility for an instant loan for CIBIL defaulters. Also, try to clear existing debts, including credit card dues, before taking a low credit score loan, as this can strengthen your credit profile.
How NBFCs and FinTechs evaluate loans for defaulters
NBFCs and FinTech lenders assess credit history and credit scores when reviewing a loan for CIBIL defaulters. They evaluate the borrower’s financial status, existing debts, and past repayment behavior. Lenders also verify income proof, bank statements, financial records, and identity documents. In some cases, personal guarantees may be required to reduce risk. For those seeking an urgent loan for a low CIBIL score, showing stable income and a clear repayment capacity can improve approval chances, even with a weak credit profile.
Impact of settled loans and written-off accounts
If an account shows the status, settled, it means you negotiated with the lender to close the dues for less than the full amount. Lenders consider this risky, which can affect your chances of getting a loan as a CIBIL defaulter.
A written-off status appears when dues remain unpaid for around 180 days or more, and the lender marks the amount as uncollectible. This severely damages your credit profile and makes approval for an instant loan for CIBIL defaulters much harder.
Conclusion
CIBIL scores are a crucial aspect of modern finance. Lenders depend on this number to ascertain an applicant’s creditworthiness. While urgent loans for CIBIL defaulters are still attainable, boosting your score is always a good idea.
Basic steps to increase your CIBIL scores, such as paying your loans on time and avoiding taking more than you need, can help immensely. This will also help you get an instant loan online without much trouble.
So if you are looking for an instant loan, why not try Tata Capital? We offer loans at competitive interest rates with minimal documentation. Furthermore, within four simple steps, you will get the necessary funds in no time.
CIBIL defaulters can get a loan by offering collateral, applying with a co-signer, or availing of a loan at a higher interest rate with the lender. Alternatively, they must focus on improving their credit score or try alternative borrowing options like peer-to-peer lending.
Can a defaulter in CIBIL get a loan?
While it can be difficult for CIBIL defaulters to get loans at favourable terms, they can try applying with a lender at a higher interest rate, get a co-signer, or consider pledging collateral.
Does CIBIL reset after 7 years?
CIBIL retains an individual’s financial and credit history for 7 years, after which details of any missed payments or defaults are removed.
How to clear a bad CIBIL score?
You can improve a bad CIBIL score by repaying outstanding debts, maintaining low credit utilisation, and applying for a new loan within your limit. Opting for an affordable loan amount will make repayment easier on your finances.
How can I correct my CIBIL score immediately?
You cannot build your credit score immediately. So, make sure to repay any outstanding debts, use your credit prudently, and apply for affordable loan amounts within your financial capacity to improve your credit score over time.
For How Long Does Credit Keep the Record of Defaulters?
Credit bureaus generally retain records of payment defaults for 7 to 10 years, based on the nature of the default.
Can I get a loan with a 500 credit score?
While a credit score of 500 is extremely low, making it challenging to get approved, it may still be possible to obtain a loan. Some lenders may offer options for individuals who need urgent loans despite having a CIBIL default.
What happens after 5 years of credit default?
A default may still be visible on your credit report even after 5 years. However, its impact may lessen with time. This will make it easier for borrowers to rebuild their credit scores through repeated responsible financial practices.
Can CIBIL defaulters get urgent personal loans online in India?
Yes, getting an urgent loan for CIBIL defaulters is possible in India, but the approval is usually harder. Many borrowers opt for alternatives such as co-signers, guarantors, or collateral when applying for an online loan for CIBIL defaulters.
What are the best loan options for low credit score borrowers?
Some common forms of loans for defaulters in India include loans with co-applicants, guarantors, or collateral, as well as loans against FDs, PPF, stocks, insurance policies, or property.
How can I improve my CIBIL score quickly for loan approval?
Pay dues on time, avoid multiple loan applications, and keep your credit utilization low to improve eligibility for a loan for CIBIL defaulters.
Which documents are required for instant loan approval for CIBIL defaulters?
You may need an ID proof, address proof, recent salary slips, bank statements, and proof of employment.
Do NBFCs and online lenders offer urgent loans without a CIBIL check?
Yes, they do, but usually for smaller amounts. And, they may still verify your income before issuing an urgent loan for CIBIL defaulters.
24 February 2026
14 mins read
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