Does Restructuring A Loan Affect Your Credit Rating

Yes, restructuring is capable of negatively impacting your credit score, which is why it is a last-ditch effort. Loan restructuring is seen as a desperate action taken when borrowers are on the verge of defaulting. That is when negotiating the alteration of an existing loan contract is the only way to repay the debt. 

When you choose to restructure the loan, your lender reports it as “restructured” to the credit bureaus. This information is noted in your credit report and can impact your future loans. Even if you choose restructuring for only one loan, it will still be marked as ‘Restructured’ in the credit report.

However, note that the RBI has stated that the credit ratings of borrowers who opt for the one-time restructuring will not be impacted. This is a special offer from the RBI to help borrowers during the pandemic. If you opt for a loan restructuring under this option, then your credit scores will not be impacted.