Impact of Loan Restructure on Credit Score

Impact of Loan Restructure on Credit Score

Impact of Loan Restructure on Credit Score: Loan restructuring is an ideal way to reduce the repayment burden of a loan. But, there are a few certain questions that are there on the top of the mind. One such question is whether the restructuring of the loan will impact the credit score or not. In this blog, we will identify the impact of loan structure on credit score. 

Understanding Loan Restructuring

Loan structuring is a one-time scheme launched by RBI for borrowers to reduce the burden of repayment of the loan amount. Restructuring of the loan means the loan terms will be modified with mutual understanding between the lender and borrower. In simple words, the restructuring of a loan can change the rate of interest, tenure, and the payments need to be done monthly. Although, it provides much-needed flexibility and relief to the borrowers but impacts the credit report of the borrower.

Also Read: Check Out All The Details About Loan Restructuring In One Of Our Specialised Blogs Education Loan Restructure!

How Loan Restructuring Affects CIBIL Score

There is a specific section in the CIBIL report as the ‘status of loans’. Whenever you try to restructure your loan, it will reflect on your CIBIL report in the status of loans section. The highlighted part of loan restructuring on the CIBIL report indicates to future lenders that you faced a crisis due to which you restructured your loan. It will also result in a temporary dip in your credit score. However, the dip in the credit score is temporary and can be improved with time by following just a few simple steps.

How to Remove Loan Restructure Status from the CIBIL Report

In the case of education loan default, it is important to note that the loan restructure status on the credit report remains for a specified period. However, you can improve your credit score and the loan restructure status can be removed easily from your credit report. You just need to follow the steps mentioned below.

  • Be sure to complete all the payments on time after loan restructuring.
  • Timely payments of all the cards and loans improve your credit score.
  • To avoid any kind of inaccuracy, keep regular monitoring of your credit report.
  • Dispute any discrepancies immediately.
  • Also, maintain a healthy credit utilisation ratio.
  • Keep yourself updated with your real-time credit reports.

Also Read: Facing financial distress due to high-interest rates? Check all the information about Education Loan Refinancing and get a balance transfer for the loan.

FAQs

How does loan restructuring impact Credit score?

The loan structuring indicates the crisis in doing payments which may result in barring lenders in the future.

Can I improve my credit score after loan restructuring?

Indeed, you can improve your credit score after loan structuring as well. However, you need to follow some easy steps like making payments on time, monitoring your credit score regularly, and maintaining a healthy credit utilisation ratio.

How much time does it take to improve the credit score after loan restructuring?

It depends on the payments you are making and in what patterns. The regular payments can improve your credit score in a very short period.

Is there a processing fee I have to pay if I restructure my loan?

You may be levied a fee if you apply to get your loan restructured.

Can I remove the loan restructure status from my CIBIL report?

Yes, you can remove the loan structure status from your CIBIL report in very little time with regular payments and monitoring.

Hope you liked our blog about the impact of loan restructuring on credit scores. To know more about the loan application process, the best bank accounts for students, forex and banking experience for global students, or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience. 

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About Farina Khan

Farina Khan is a journalist by profession and a writer by passion. She carries over a decade of experience in Journalism and Mass Communication and worked with some renowned media organisations like Doordarshan and Zee Media. She performed numerous roles during her work tenure including reporting, anchoring, and heading output as well. Her passion for writing, combined with dedication in delivering high-quality content, drives her to excel in the dynamic field of content writing. From thought-provoking articles to SEO-friendly blog posts, or engaging website content, She is here to bring the ideas to life through words.

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