Will My Credit Score Be Affected If I Default on a Personal Loan?
Here’s the Truth — Straightforward and Simple
We’ve all been there. Something unexpected throws your monthly budget out of balance — a job loss, medical emergency, business loss — and suddenly, the EMIs you were paying regularly just don’t go out anymore.
Days pass. Then weeks. And one morning, you get a call.
“Sir, you’ve missed your payment. When will you clear it?”
If this sounds familiar, you’re probably wondering — is this going to mess up my credit score?
Short answer: Yes. It will.
Long answer: Let’s walk through it properly — and talk about how you can fix it too.
First — What Is a Credit Score and Why Should You Care?
In India, your credit score is a number between 300 and 900, used by banks and financial institutions to decide how much they can trust you with money.
If your score is high (say, 750+), banks usually approve your loans without much hesitation. A low score? You may get rejected — or worse, offered high-interest loans you can’t afford.
And your score? It’s based on things like:
- If you pay your EMIs on time
- How much loan or credit card debt you have
- How often you apply for new loans
- Whether you’ve ever defaulted before
So What Happens If You Default?
1. Your Credit Score Drops – Fast
Even one missed EMI can knock 50–100 points off your score. If you miss two or more, your score can go from “great” to “poor” within a few months.
And remember — your lender reports to credit bureaus every month.
2. Your Account Can Be Marked ‘Settled’ or ‘Written-Off’
After 90+ days of no payment, banks may tag your account. That label stays on your credit history for up to 7 years, making future borrowing difficult.
3. Your Guarantor (if any) Is Also Affected
If someone backed your loan, they’re also in trouble. The lender will reach out to them. And their credit score? That may take a hit too.
But It’s Not Just About the Score
Harassment Begins
You may start getting calls — multiple times a day. Sometimes they’re polite. Sometimes they’re not.
Some agents call your relatives. Some visit your home. Some even send WhatsApp messages with threats.
This crosses the line — and it’s illegal.
Legal Trouble Might Come Too
If the loan is big, or if your cheques have bounced, the bank might take legal action:
- Civil suits under Order 37 CPC
- Cheque bounce cases under Section 138 of NI Act
- Recovery through Debt Recovery Tribunal (DRT)
Can You Fix This? Yes. You Absolutely Can.
Step 1: Don’t Panic. Get Legal Support.
This is where people make mistakes — they either ignore the calls, or agree to anything the bank says without understanding the consequences.
Call someone who’s done this before. At Legals365, led by Advocate B.K. Singh, we help clients defend themselves, respond legally, and protect their credit record.
Step 2: Settle or Restructure — But Legally
Banks are open to solutions. You might not have the full amount, but they may agree to:
- Settle the loan (pay less than full)
- Restructure (reduce EMI, extend term)
Let us handle the paperwork. We speak to the bank for you — and ensure nothing goes wrong.
Step 3: Rebuild the Right Way
Once the default is handled, it’s time to get your credit score back up. Here’s how:
- Pay your new EMIs or bills on time
- Keep your credit card usage below 30%
- Avoid too many loan applications
- Use a secured credit card (like one backed by FD)
- Monitor your CIBIL report every 2–3 months
How Legals365 Can Help You
We’re not just here to defend you in court. We’re here to take the load off — mentally and legally.
Here’s how we help:
Stop Harassment Legally
If recovery agents are threatening you or overstepping, we send cease-and-desist notices immediately. You don’t have to be bullied.
Legal Case? We’ll Handle It.
Court notice under CPC? Summons from DRT?
We represent you, file the correct responses, and protect you from being exploited.
Bank Talks? We’ll Do It.
We speak directly to the lender, negotiate terms that are fair, and ensure your credit file doesn’t suffer more than necessary.
Credit Repair Support
Once the case is closed, we don’t vanish. We guide you on how to fix your credit step by step — until you’re eligible for loans again.
Final Words — You’re Not Alone in This
Yes, defaulting affects your credit score. That’s the reality. But it’s not the end of your financial future.
People make mistakes. Life throws curveballs. What matters is what you do next.
Legals365 and Online Noida and Advocate B.K. Singh are here to stand with you — not just to fight, but to guide.
Whether it’s calls, court, or credit repair — you’ve got backup now.
Take the first step. Let’s fix this together.
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