If you have ever failed to pay your loan or credit card bill, it might be recorded as a default in your CIBIL report. Your credit score might go down because of this, and it could be difficult to get loans in future. However, there is no need to be anxious since default on loans can be rectified through some easy steps.
Let us explore the process of clearing loan defaults from CIBIL and improving your credit score in India.
What Is A Loan Default?
The term loan default refers to this situation in which you fail to pay your loan EDIs or credit card dues promptly. Over a period of time, if your payments are delayed for more than 90 days, the bank or lender will classify your account as a Non-Performing Asset (NPA).
This information is then sent to CIBIL, which lowers your credit score and shows a negative record on your credit report.
| Reason for Default | How It Affects You |
| Missed EMIs | Lowers credit score |
| Ignored reminders | The lender may report you as a defaulter |
| Unpaid credit card bill | Shows negative payment history |
| Too many loans | Increases debt-to-income ratio |
Why It’s Important to Clear Defaults
Giving up on loans makes your CIBIL report less negative, but also enables you to,
- Easily apply for and get new loans
- Lower interest rates
- Win some confidence from banks and creditors
- Faster credit score increase
- Clearing Loan Defaults from CIBIL Steps
Steps to Clear Loan Defaults from CIBIL
1. Check Your CIBIL Report
To do this, visit the official CIBIL website and get your free report. Go over your loan and credit card accounts thoroughly. Make a note of the accounts that are listed as “default” or “settled.”
If you find any errors, you can file a complaint with CIBIL through their online platform.
2. Tell the Reason for Default
Discover the reason for your default
- Was it because of job loss or illness?
- Did you forget payment dates?
- Were there wrong charges by the bank?
Being aware of the cause will allow you to choose the right fix.
3. Speak to Your Lender
Communicate with your bank or lender directly. Be honest and explain your situation. Many lenders are open to negotiation if you show a willingness to repay. You can request,
- Revised payment schedule
- Partial payment settlement offer
- Moratorium period (temporary halt in payments)
4. Clear Pending Dues
Once you agree on a repayment plan, clear your outstanding dues as early as possible. Make sure to keep all the receipts and email confirmations safe. After complete payment, request your lender to update your records with CIBIL.
5. Dispute Errors, If Any
If your report still states “default” even after payment, you can file a dispute with the CIBIL website. Attach your payment proof, and CIBIL will check with your lender before making the data correction.
Tips to enhance your credit score after the clearance of defaults
The moment your defaults are cleared, you can start to build your score.
Here are the steps,
- Make it a habit to pay all the EMIs punctually – Create alerts or avail of the auto-pay facility.
- Limit the usage of your credit card to below 30% – Don’t use the complete limit.
- Apply for loans one at a time – The more loans you take, the more pressure you have on repayment.
- Look into your credit report often – Once every six months.
- Manage small loans wisely – A personal loan or BNPL plan can restore trust if paid off on time.
How Long Will It Take for a Default to be Removed?
Once the lender updates your record, it can take 30 to 45 days for the new status to appear on your CIBIL report. However, the old default remark may stay on your report for up to 7 years, even though its impact reduces over time.
| Action | Time Taken for Update |
| Lender reports payment to CIBIL | 30–45 days |
| CIBIL updates your report | Next reporting cycle |
| The impact of default reduces | Gradually, within 6–12 months |
How Olyv Can Help You Rebuild Credit
If having a low credit score is your problem, Olyv can be of great assistance. Making small personal loans, giving instant disbursals, and equipping with financial tools are some of the ways that Olyv works.
The services offered by Olyv include the following,
- Borrow money for a short duration and pay it back without delay
- Smoothly monitor your payment history
- Acquire free knowledge on how to enhance your credit health
- Create a favourable repayment record with the passage of time
Through the wise use of Olyv’s credit-building features, it is possible to restore the past defaults gradually and to build a strong financial reputation.
Conclusion
Clearing loan defaults may seem hard, but it’s completely possible with discipline and honest communication. Start by checking your CIBIL report, clearing your dues, and using tools like Olyv to track and manage payments better.
Remember, a good credit score is built step by step. Paying on time, keeping debts low, and reviewing your report regularly are the keys to financial freedom.
Even if you’ve made mistakes in the past, you can always rebuild trust with lenders. The sooner you act, the faster your credit health improves.
