North India Statesman
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News India Live, Digital Desk: Loan default impact: India’s largest private sector lender HDFC Bank has said on its website, “CIBIL works as the first impression for the lender, the higher the score, the better the possibility of your loan review and acceptance.” It is difficult to say more briefly. Whether it is Experocion, Equifax and Hymark or CIBIL, a person’s credit score is the most important, although not always the only decisive, whether a lender institution is going to consider your application for loan.
Of all retail loans, individual loans are probably the most popular because any person with virtually income is theoretically eligible to apply for a personal loan. Personal debt is an unsafe loan, which means that the lending institution has no collateral against the funds lent and therefore, the individual loan is the most risky risk of any lending institution. Therefore, they are the biggest headache for any bank. What happens when you miss EMI?
Immediately, the credit score of a person who defaults is reduced. The issue is how long its effect lasts on the credit score. The problem of low credit score is that if your credit score is low then no lender will give you a loan. The real concern is that the negative effect of a one -time lapse on your credit score can last for seven years !!! If you apply to any bank or NBFC for any kind of loan, this negative effect will be clearly visible on the credit score and will immediately limit your possibilities of getting a loan or getting a favorable interest rate at any rate. Even though you have missed a personal loan, all kinds of loans – home loans, vehicle loans, personal loans and education loans – will be seen with extreme doubt.
Our Credit score But how to deal with such effects?
Individual finance experts point to some standard procedures to deal with such a problem. These are:
Quick repayment: If you have failed to repay EMI on time, you should always try to pay the remaining dues as soon as possible. If you do this, it will not put any pressure on your credit score. There is no inaccuracy in the report, to keep an eye on it, the credit score should also be checked from time to time. If there is any inaccuracy, it should be brought to the attention of the concerned Credit Bureau.
‘No outstanding’ certificate: As soon as the loan is terminated, the lender will have to issue a ‘no outstanding’ certificate, which you can present anywhere as proof of the termination of the loan.
Avoid applying: One should not apply for loans in many banks. This reflects the frustration of the applicant and no lender likes it.
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