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How to Get Home Loan for CIBIL Defaulters ?

The Reserve Bank of India started collecting information about defaulters in 1994. Initially, the RBI used to flag those who failed to repay Rs.1 crore and above, but they revised this circular in 1999 and started recording defaulting details of individuals who crossed the threshold of Rs.25 lakh.

To classify defaulters better, the RBI has introduced two categories – willful and non-willful defaulters. In addition, since 2002, the RBI mandated all financial institutions to send defaulting details to credit rating agencies such as TransUnion CIBIL. Afterwards, this agency started maintaining a list of suit-filed and non-suit filed accounts with the names of defaulters.

Unfortunately, those who have their names on that list will most likely be ineligible for any credit. Therefore, it can be difficult to acquire a home loan for CIBIL defaulters. However, individuals can avail a home loan even if they possess a low CIBIL score.

How Can CIBIL Defaulters Get a Home Loan?  

Although it is almost impossible for defaulters to acquire a home loan, credits against a low CIBIL score are still available. In this case, too, borrowers have to prove their creditworthiness and satisfy the other eligibility requirements. Individuals can avail of a home loan with a low CIBIL score from Bajaj Housing Finance, provided they fulfil other eligibility criteria diligently.

Conditions Under Which CIBIL Defaulters Can Get a Housing Loan 

While home loan for CIBIL defaulters is available under no circumstances, individuals can adopt ways to get their name removed from the list and qualify for this advance. Since a home loan is a secured credit,

  • Intending borrowers can request a home loan on low CIBIL score approval by pledging a high-value property and meeting other eligibility
  • CIBIL defaulters can ‘settle’ existing debts and apply for a home loan afresh

Nonetheless, in such cases, the benefits of availing of a housing loan, such as low interest rates and top-up loan, may become limited.

Ways to Get a Home Loan with a Low Credit Score

Ways to Get a Home Loan with a Low Credit Score.

  • Apply for a small loan amount
  • Select a longer tenor
  • Pledge a property with a high current valuation
  • Opt for a joint home loan with an applicant with a good CIBIl Score.

Even though approval for a home loan without a CIBIL score is not easy, following these tips can help improve eligibility.

How to Remove Name from CIBIL Defaulter List? 

Borrowers who have defaulted in the past can approach the financial institution in question and request an ‘out-of-court" settlement by agreeing to pay the amount due. However, in such cases, the financial institution will withdraw the case only after getting the full amount. On receiving it, they will update CIBIL about the deal, and the individual’s name will be removed from the list. However, remember that in such cases, the account will carry a ‘settled’ tag for the next 7 years.

In another scenario, an individual has to be present at court and justify the reasons for defaulting. In that case, a lender may offer a settlement amount that they are liable to pay at any cost. Since availing of a home loan for CIBIL defaulters is impossible, the best solution is to be responsible and cautious while managing debt.