Will my credit score be affected if I default on a personal loan?
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Missed a few EMIs? Worried the next bank call could bring trouble?
You’re not alone. It happens.
Life gets messy — income stops, medical bills pop up, jobs change — and boom, the loan you were paying smoothly starts slipping behind.
But does this mess with your credit score?
Yes. It does. And not just a little.
But the good news is it’s not a dead-end. It’s a bump. And you can bounce back.
Let’s break it down, without the jargon.
What Exactly Is a Credit Score?
Think of it as your financial reputation.
It’s a number — between 300 and 900 — that tells lenders how trustworthy you are with borrowed money.
A good score (750+) makes it easy to get loans. A low one? Not so much.
Credit bureaus like CIBIL, Equifax, or Experian create this number based on:
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Whether you pay on time
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How much you owe vs. how much credit you have
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How many loans or cards you use
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Your repayment history
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And — if you’ve ever defaulted
Okay, So What Happens If You Default?
Your Score Drops — Fast
Even one missed payment can dent your score by 50 to 100 points. If you miss multiple, it adds up.
Lenders Flag You
If the bank marks your account as “settled” or “written off,” that’s a big red stamp on your credit report. That tag can stay there for up to 7 years.
Your Guarantor’s Score May Drop Too
Got someone who backed your loan? Guess what — they’re on the hook too. If you default, their credit score might take a hit right along with yours.
What Else Can Go Wrong?
You May Get Calls. A Lot of Them.
Recovery agents can get annoying — sometimes even cross the line.
Some people have been:
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Called dozens of times a day
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Threatened
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Shamed in front of neighbors or relatives
You don’t have to take it. That’s harassment, not recovery.
Banks Might Sue
If the loan amount is big, or your postdated cheques bounce, you could face legal action. Many borrowers receive notices under Order 37 of the CPC or Section 138 of the NI Act.
They can even take it to Debt Recovery Tribunal (DRT) if the amount is above ?20 lakh.
Is It Fixable?
Absolutely.
But you’ve got to act early and smart.
Here’s what you do:
Step 1: Get a Legal Expert
Don't wait till things spiral. Legals365 — led by Advocate B.K. Singh — can guide you legally and protect you from illegal harassment or false pressure.
We handle court notices, negotiate with banks, and help you stay on the right side of the law.
Step 2: Consider Settlement or Restructure
Sometimes banks agree to a legal settlement where you pay part of the loan. It still shows up on your credit report, but it’s better than leaving it unpaid.
In other cases, you can ask the bank to restructure the loan — maybe longer EMIs, smaller monthly amounts, or a payment break.
Step 3: Rebuild Your Score Over Time
Yes, it takes effort. But you can:
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Start paying your bills on time
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Use a secured credit card (backed by FD)
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Keep your credit usage low
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Review your credit report often
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Fix any mistakes you find there
Where Legals365 Comes In
We Shield You from Harassment
We legally stop recovery agents from overstepping. If someone calls beyond the rules, we send a notice or complaint right away.
We Handle Your Court Matters
Received a court notice? Summoned for a DRT case? Let our legal team step in. We represent you, file replies, and protect your rights.
We Negotiate on Your Behalf
Sometimes, just having a lawyer speak to the bank changes the tone. We negotiate settlements and restructuring that work for you — not just for the bank.
We Guide You After the Storm
Once you’re back on your feet, we help you rebuild your credit, avoid traps, and learn your rights as a borrower.
Final Thought
So yes — defaulting on a personal loan will hurt your credit score. That’s a fact.
But what you do next? That’s what really matters.
You can freeze, or you can fight smart.
You can panic, or you can plan.
With the right legal backup — you win.
Reach out to Legals365.
We don’t just handle cases — we help you breathe easier again.
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