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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 28, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Mamata on Aug 01, 2025Hindi

My husband is a govt employee. He sign as a guarantor to a person for loan. The person paid emis but late payments. Three to four months pending also thera. That's why my husband cibil score decreased to 640. Present we want to take a educational loan for my child. But the bankers told to me your husband cibil score low so we won't give loan. You will increase cibil score 700 above then we will give. If the person paid pending amount paid how much time to take 640 to 700 ? give me a suggestion what we have to do?

Ans: You have raised an important concern. Many people do not realise the risk of signing as guarantor. You have understood the issue early. That is the first positive step. There are ways to improve the situation. Let us see the matter in detail from all angles.

» Why guarantor role affects credit score

When your husband signed as guarantor, he became equally responsible.

Any delay in EMI by the borrower impacts guarantor’s CIBIL score also.

Three or four months delay is considered a serious delay.

The bank reports it as overdue in CIBIL system.

This is why your husband’s score dropped to 640.

Banks see this as high risk for future lending.

» Minimum score needed for loans

Most banks prefer a score of 700 or above.

For education loans, some public banks may accept 675 also.

But private banks and NBFCs ask for higher.

With 640, it is very difficult to get approval.

That is why they asked you to first increase the score.

» How much time to move from 640 to 700

Improvement depends on repayment behaviour going forward.

If pending EMIs are cleared fully, CIBIL will update in next cycle.

Normally, CIBIL updates every 30 to 45 days.

Once payment history improves, score will rise gradually.

Moving from 640 to 700 usually takes 6 to 12 months.

If all payments are regular and no other issues, it may happen faster.

But with past 3-4 month delays, it may take closer to one year.

» Immediate steps to take

Ask the borrower to pay all pending dues immediately.

Ensure no further delay in EMIs.

Monitor regularly if the bank is reporting correct updates to CIBIL.

If any incorrect entry, raise dispute with CIBIL.

Pay small credit card bills and other dues on time.

Keep credit utilisation below 30% of limit.

Do not apply for multiple new loans in meantime.

» Alternative options for child’s education loan

You can try to apply in your own name as applicant.

If you have steady income and good CIBIL score, bank may accept.

Some government banks allow mother as co-borrower when father score is low.

You can also provide collateral security if available.

Some banks accept FD or property as collateral for education loan.

This can reduce focus on low CIBIL score.

» Role of CFP in such cases

A Certified Financial Planner can help you plan alternative funding.

For short-term, bridge funding may be needed from savings.

Planner can also guide on loan structuring to reduce risk.

Future education planning for children can be shifted more to investments.

This reduces heavy dependence on loans.

» Preventing such issues in future

Do not sign as guarantor for others in future.

Even close relatives’ loans can harm your credit score.

Always ask for written clarity before signing.

Keep watch on your CIBIL report at least once every year.

Encourage borrower to set auto debit for EMIs.

This avoids delay that affects guarantor also.

» Tax benefit aspect for education loan

Once loan is taken in your name or your husband’s name, interest gives tax benefit.

Section 80E allows deduction on interest for eight years.

This helps reduce tax burden during repayment years.

So, securing loan in right name is important for future benefit.

» Emotional and family aspect

You may feel hurt because someone else’s behaviour affected your family.

It is natural to feel upset.

But now focus should be on solutions, not past.

By taking control, you can rebuild score and still get loan.

Stay calm and disciplined.

Financial discipline is the best answer to past errors.

» Finally

Score improvement from 640 to 700 may take 6 to 12 months.

Immediate action is clearing all pending EMIs.

You can also explore education loan with you as co-borrower.

Collateral-based loans can be another backup.

Monitor CIBIL report every month till score rises.

Avoid signing as guarantor again in future.

With steady discipline, your husband’s score will improve above 700.

Education loan for your child is still possible with right approach.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.