Can a small default on education loan impact my CIBIL score?


Can a small default on education loan impact my CIBIL score?


To answer your question is one word- Yes. A default on any loan should not be taken lightly as it can affect your credit score and make you susceptible for future loans. No loan default should be considered small irrespective of the amount involved. Make sure you have plans in place to counter any possible loan repayment defaults. It is therefore essential to make sure you never let your education loan to go down the NPA route even if it means controlling your other financial investments for the time till your education loan gets repaid completely.


Hi Vichu,

Loan defaults will affect your Credit Score. This includes Education Loan, Home Loan and Personal Loan. If the bank writes off your loan, that will also have a negative impact on your Credit Score. This is because banks mention how the loan was closed to credit bureaus and this is included as a remark in your credit report.

You will not be mentioned as a defaulter in your credit report if you close your loan account. However, if you pay a partial amount and your loan account is not closed, you might be listed as a defaulter. It will be better to negotiate with your bank and ask for a one-time settlement to pay off your loan. This way, your Credit Score will not go down as much as it would if you were a defaulter. Want to check your Credit Score for free, click here.

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BB Expert