Adhil Shetty, CEO, BankBazaar.com, said, “Defaulting on a credit card usually happens if you have missed making payments for over 90 days. While this can severely damage your credit score, not all is lost. If you find yourself in such a situation, the first thing to do is act quickly.”

If you find yourself in such a situation, the first step towards recovery is clearing your dues in full as soon as possible. If you cannot afford to make a full payment, you may consider requesting your bank to convert the total dues into EMIs. This will make it easier for you to manage repayments without further damaging your score. You can also consider other options, like a balance transfer or a personal loan to consolidate your debt.

Also, don’t ignore your bank’s calls. Instead, reach out to your bank and explain your situation. Most lenders are likely to be open to working out a repayment plan. Depending on your situation, request a settlement option, be it EMI or a one-time settlement. The guidelines by the Reserve Bank of India allow for loan restructuring in cases of financial stress.

Shetty says, “Prepare for your credit score to take a hit. It could go down by up to 100 points or more, depending on various factors. This will impact your creditworthiness and future eligibility for loans or credit cards. To understand the extent of the damage, check your credit score from an established bureau like CIBIL or Experian.”

Next, avoid taking on new loans or credit cards until you have cleared the dues on existing ones. If you must borrow, have a robust repayment plan in place to ensure you can repay. After you have settled your dues, ask for a ‘No Dues Certificate’ from the bank and ensure your credit report is updated to reflect the closure.

Radhika Binani, Chief Product Officer, Paisabazaar, says, “Consumers should understand that while your credit score gradually improves through consistent, responsible repayment behaviour, any default, in a credit card or a loan, would continue to affect your chances of approval for new credit for several years. Your past repayment behaviour is one of the most crucial aspects that lenders consider when evaluating a new application for any kind of credit. Hence, it is always advised to be disciplined while spending through your credit card and ensure you pay outstanding dues in full timely.”

Rebuilding your credit score, especially after a default, will take time and effort. Make payments consistently and practice healthy financial habits to ensure you are on the road to recovery.

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Did you default on your credit card? Here's how you can fix it