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If you are wondering how to get a personal loan on low CIBIL score, allow us to put your mind at ease. While it may take a bit of effort, it is absolutely possible to get a personal loan on low CIBIL score.
People require personal loans from time to time for various needs. It may be a medical issue, a repayment problem or some other important reason.
A good CIBIL score ensures that you easily avail loans any time you want or need to. But the problem arises when you have a poor CIBIL score and need a loan.
But first,
What is CIBIL Score?
Lenders decide whether or not to give you a loan based on your repayment credibility. Your CIBIL or credit score will show them if you are capable of it.
So CIBIL, or the Credit Information Bureau (India) Ltd., is essentially your credit history. It is the data that shows your past loans, repayments, and other vital factors. It is among the highly important agencies authorized by the RBI, or the Reserve Bank of India, to calculate the credit score of an individual.
Most lenders may not want to give you a loan if your credit score is bad. This is because a personal loan is oftentimes an unsecured loan. It leaves the lender with no assets as a backup.
So, it is important to have a good CIBIL score if you want to obtain a personal loan.
What is a Good CIBIL Score for a Personal Loan?
Ideally, a valid credit score falls within the range of around 300 to 900. 900 is the highest credit eligibility score. You should try to maintain a high number score if you want to avail of personal loans easily; Because the higher the score, the easier it is to get a loan.
You can get a personal loan for CIBIL score of 600 with considerable comfort. Many people often look for a personal loan for CIBIL score of 550 as well.
Is There a Personal Loan for CIBIL Defaulters?
While there is no guarantee that lenders will give you a personal loan for low CIBIL scores, it can still happen.
You can do several things to assure repayment to the lender. For instance, you can show them you have a good amount in the bank along with job security. You can also show them that despite the bad CIBIL score, you are making timely payments on your existing loans.
Tips to Get a Personal Loan with Low CIBIL Score:
You need to stop fretting about how to get personal loan on low CIBIL score. We have a list of (some) challenging but absolutely doable things that can get you a personal loan. Yes, despite the bad CIBIL score. Take a look at it below!
1) Request for a low personal loan amount
If you ask the lender for a big amount with a low CIBIL score, the chances of getting the loan will be less. This will imply that you are a high-risk candidate. In simple terms, it means that the lender doesn’t believe you will repay the money. So, ask for a lesser amount that will make the lender more comfortable giving it to you. It will also be easier to repay a smaller amount than a big one.
2) Give proof of income support to pay EMIs
To make a lender favorable toward your personal loan application, show him that you have a good income source. This is to assure him that you will pay the EMIs unfailingly. A recent salary hike will be a bonus point.
You can also reveal any additional source of income you may have. Doing this will increase your chances of availing a personal loan despite a poor credit history. Although, be prepared to encounter a higher interest rate.
3) Get someone to co-apply or stand as guarantor
Ask a relative or friend to be a co-applicant alongside you. When a lender sees that you have a guarantor or a co-applicant with a good credit rating, he might process the loan you seek.
Make sure to inform the guarantor or co-applicant beforehand about this. Fill in the KYC details of the guarantor/co-applicant in detail and make sure to sign in all the relevant forms.
4) Absolve your credit report of errors
A lot of people wonder how to get personal loan on low CIBIL score, without realizing their scores are not really that low. This usually happens when there are errors in your CIBIL score. A common cause is that the latest data hasn’t been updated to your credit history. So, although it isn’t your fault, your personal loan application ends up in the reject box.
To avoid this, always check your latest CIBIL scores. You can do this for free online.
5) Ask the lender to consider a NA or NH on your credit report
If your credit activity has been nil for the last 36 months, this is marked by an NH or NA on the credit report. When this happens, you end up without any credit score in your CIBIL report.
Explain this to the lender and he may end up giving you the loan at a higher interest rate. Although, you should ensure you have more than enough funds in hand for the repayment. Else, your CIBIL score could plummet a whole lot further and cause more damage.
6) Try NBFCs – Non-Banking Financial Companies
If your CIBIL score is low and you need money immediately, NBFCs are the best bet. Such financial institutes are more lenient than banks when granting loans. There are good chances of them overlooking a bad CIBIL score on your loan application. So, in case of financial emergencies, take this road for better chances of success. Do keep in mind that interest rates might differ at NBFCs when compared to banks.
7) Opt for secured personal loans
Most banks might reject your loan application owing to a poor credit score. But you can always try getting a secured personal loan by keeping some valuable collateral. For instance, you could keep your gold, land, fixed deposit and other such valuable items. Since these are secured loans, low CIBIL scores are often overlooked.
8) Look for banks your employer is tied up with
Here’s how to get personal loan on low CIBIL score: Organizations and large companies usually tie-up with specific banks that tend to be employee-friendly. Find out if your employer is tied-up with such a bank and apply for a personal loan there. Since they already have your bank record, they may show you favor. This way, you may get a personal loan with low CIBIL score as well.
Improve Your CIBIL Score
While using the above methods might answer your query of how to get personal loan on low CIBIL score, it isn’t a long-term solution. You should try to improve your poor credit rating. You can do this by clearing all your dues on time and making full repayment as opposed to partial one.
There is no substitute for a high CIBIL score. If you maintain a good CIBIL score, the chances of you availing personal loans will be very high. So, get on it and increase your creditworthiness!
