Co-Borrowers Credit Card Default and Impact on Home Loan

Dear Client,
A loan availed of by the primary borrower making one co-borrower/co-applicant does not impose any legal right or liability on the co-applicant/co-borrower unless the primary borrower fails to repay the loan. However, the co-applicant is equally liable to repay the loan if the primary borrower defaults to repay the loan. But, a co-borrower's credit card default may severely damage the primary borrower's credit score because a default is reported to credit bureaus (CIBIL) for both individuals which can make it harder for the primary borrower to qualify for new loans or obtain better terms, as lenders consider the shared credit history when evaluating applications. In that scenario, if you can convince the Bank that you can repay the loan yourself, you can ask the Bank to remove the co-borrower's name from the home loan agreement and continue with the loan on your own. If you cannot qualify for the loan alone, you can request the Bank to replace the co-borrower with a new guarantor who would not have ownership rights but would guarantee repayment of outstanding loan if you default. If the existing Bank does not agree or convinced with your requests or proposals, you may consider porting of existing loan or refinancing the loan with an another Bank or lender. In some cases, a quick counselling session with a certified credit counsellor can help you to discover your options and choose the right path forward to settle or resolve the issue with the Bank.