How to Get Loans for Credit Card Defaulters?

First of all, let’s not have any confusion about what a credit card default means.

If you fail to pay the Minimum Amount Due on the credit card for a few consecutive months you stand the risk of default. You receive a default notice from the card issuer after 6 months of non-payment. Every following month of non-payment hits your credit score further while the debt keeps on increasing due to interest and other financial charges.

Credit Card issuers regularly share your credit report with credit bureaus like CIBIL & Experian. And the impact of default stays in your report for up to 7 years. And any future credit issuer or bank would want to look at your credit report before extending you any type of credit or loan. A default in your credit report is a major red flag to the banks and can result in the loan application getting denied or attracting a high rate of interest.

Also Read: 3 Reasons Why Paying Credit Card Minimum Amount Does Not Help?

So to answer your question, you may or may not a get loan if you have defaulted on your credit card bill payment, but you are most unlikely to get one on great repayment terms.

Let’s dig deeper into that, shall we?

Here are a few options you have as a defaulter applying for a loan:

1. Co-apply

If your partner or a family member has a good credit score, you may try for a joint loan.
However, know that any delay or missed payments on your loan will affect both of your credit scores.

2. A loan backed by a Guarantor

If have a stable income but not a great credit score, you may still get approved for a loan if you have a guarantor. What it does is reduce the risk factor associated with lending you money. However, your guarantor must have a good credit score (750 & above) to be eligible as a guarantor.

Most people are apprehensive about signing up as a guarantor as they are held responsible for the outstanding amount in case of default. Not just that, their credit score can also take a hit if you fail to pay your dues on time.

3. Secured Loan

Another option is getting a secured loan or a loan against collateral. It could be an asset you own like property or car, or a security like fixed deposits that can work as collateral against your loan. If you default on this loan too, the collateral you have pledged will be seized by your lender.

Also Read: When should you opt for a secured credit card

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