Home Loan Default in India and Know How to Maintain a Good CIBIL Score

Home loan misconduct is steadily increasing across all segments and age groups. According to a report by CRIF India, which runs the credit bureau CRIF High Mark, the highest defaults are in the premium segment borrowers who take a loan of 75 lakh or more. Home loans are paid in monthly installments known as EMIs. These are fix amounts that the borrower is expect to pay to the bank every month as part of loan repayment. When the home loan defaults, banks do not seize the assets of the borrowers immediately. 

They send a notice to the borrower stating that the EMI payment has missed and strict action will be take in this regard. When a borrower fails to make a payment and falls behind by 90 days, the bank considers the loan to be in default. 

 Home Loan becomes an NPA?

A home loan is consider a Non-Performing Asset (NPA) by a bank when the borrower is unable to repay the principal and interest within 90 days. When a home loan becomes an NPA, the bank may require the borrower to pay the entire loan amount. To recover the home loan, lenders sell or seize the borrower’s assets or mortgaged property. The SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act) grants lenders this authority to protect their interests.

Banks specify the fair value of the borrower’s property before selling it, and the borrower can object if the property is undervalue or if he proposes an alternative to the bank to recoup the loan amount.

The bank must then serve another 30-day notice period to sell the property, and the subsequent notice must include the specifications and details of the sale. The property is later sold and the money is recover.

Common Methods to Increase CIBIL Score

These steps will help you improve your CIBIL score. An average of 4-12 months to restore your credit score is a reasonable time. All you need is patience, commitment and self-discipline, and you will achieve your credit goal.

  • Keep track of all your monthly payments and make sure you pay them on time. Payment default, even if it is a genuine omission, has a negative impact on your CIBILTM score.
  • Stop using your credit card to the maximum limit. This is one of the best ways to improve your credit score. Limit your monthly credit card bill to no more than 30% to 50% of your credit limit.
  • Close long-standing loans that are causing you credit problems. Having multiple liabilities on your credit report lowers your credit score. You may decide to cancel smaller, long-term loans that are having a significant impact on your credit report.

Having a low CIBIL™ score is not the end of the world. You can take the right steps to improve your credit score. Disciplined credit management is important to maintain a healthy credit score. Now that you know how to increase CIBIL Score, use these tips to improve your CIBIL score and reap the benefits that come with a higher score. A good CIBIL score allows you to apply for a loan and get a better deal from a bank.Though you cannot fix your credit score overnight.

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