How to Get Personal Loans with Low CIBIL Score Explained
The most accessible type of loan to obtain is a personal loan online. These are unsecured loans, which means that collateral isn’t necessary. They can be applied to a wide variety of purposes. Their documentation requirements are minimal, and their processing times are relatively short. The CIBIL score is often cited as one of the most important considerations when applying for a personal loan. However, let’s look at how to get personal loans with a low CIBIL score in this guide.
Can you get Personal Loans with a low CIBIL Score?
CIBIL score is one of India’s most popular credit scores, provided by one of the nation’s leading credit rating agencies. An individual’s credit score is determined by financial behavior. Credit card payments, loan repayments, and so on are all included. Scores range from 300 to 900, the higher the score, the better the credit history.
Credit cards, mortgages, and other products may not be approved if your credit score is low. Credit scores above 750 are typically considered excellent. Personal loan distributors will more likely approve borrowers with a credit score over 750. A CIBIL score greater than 700 is decent, while a score of 550 or lower makes getting a personal loan difficult.
Eligibility for Personal Loans with Low CIBIL Score
An essential component of personal loan requirements is the CIBIL score. The approval of your loan application depends on a variety of other factors as well.
Check your eligibility for a personal loan to learn the loan amount and EMI you can expect.
Check your CIBIL score. It is simple to do online. The chances of being approved for a personal loan are higher with a medium or good credit score. Personal Loans with low CIBIL Scores may still qualify you for a loan, but the interest rate will be considerably higher.
NBFCs have more flexible eligibility guidelines than banks and can provide you with Personal Loans with low CIBIL Score. Make sure to explain why you defaulted on a loan in the past if you did so for genuine reasons. Lenders may consider offering you a personal loan low interest if your need is justified – for example, a medical emergency.
12 Ways to Get Personal Loans with low CIBIL Score
Prove that you can afford the Personal Loans EMI payments
Even if you have a low credit score, a personal loan distributor might consider your application if you have recently increased your salary or have another income source. Even if you have a poor CIBIL score, you will be granted the loan to prove to the lender that you have a stable income and job. However, if you demonstrate your eligibility this way, you may have to pay a higher interest rate.
CIBIL score of Spouse
Poor credit history makes it hard to get personal loans, which may not be available anytime soon. The partner of a CIBIL defaulter can help you obtain a personal loan. The CIBIL score of your partner can be used to access a loan. Making your spouse the holder of the combined loan is a simple way to process this. If your partner wishes to apply for a personal loan, they must have an excellent CIBIL score.
Ask for a lower personal loan amount
The lender is more likely to be concerned about lending a high amount with a low credit score. These factors can indicate that you will default on your loan from the lender’s perspective. Suppose you decide to personal loan apply for a less expensive loan. When you take out a loan that is less than the total amount you owe, lenders may feel more comfortable giving you the loan.
File IT returns
Lenders will consider your three years of tax filing as positive evidence for Personal Loans with low CIBIL Scores. If your income drops in a particular financial year, you should still file your IT returns since they serve as proof for future loan applications.
Provide employment proof
Do try to provide a letter from your employer detailing your employment history. The lenders are more likely to approve your loan if they find that you have been continuously employed.
Despite being a CIBIL defaulter, a candidate with a high income can obtain Personal Loans with a low CIBIL Score. A personal loan is possible since your high salary qualifies you to repay the loan. Candidates with higher payments tend to be more trusted by banks than candidates with average incomes.
Apply with a co-applicant or secure a guarantor
Even if your CIBIL credit score is low, a co-applicant or guarantor can help you get a personal loan online. You will need to inform the other applicant beforehand because the latter must complete KYC procedures and provide signatures. Co-applicants and guarantors with a steady income and good credit ratings will have a greater chance of getting approved for Personal Loans with low CIBIL Scores if they find out that they were co-applicant or guarantors.
Have a decent bank balance
An account with an almost zero balance is not acceptable for lenders. So, it’s essential to prove to the lender that you don’t live beyond your means and live a modest lifestyle.
Correct mistakes in your credit report
There may be errors in your CIBIL report. It usually happens when your record has not been updated with the latest information. The credit score can be adversely affected by mistakes like these without your fault. You must therefore check your CIBIL report regularly and make any necessary corrections in order to apply for Personal Loans with a low CIBIL Score.
Request your lender to consider your case with a NA or NH in your credit report
In such circumstances, your CIBIL report may not contain a credit score. To improve your credit inactivity, you can approach your lender. However, this loan will likely have a high-interest rate because the lender may charge a higher interest rate.
Know the Relation Between your Employer and Lender
There might be a possibility that your firm has tie-ups with the lender if you work for a reputable company. Therefore, even if you have a low CIBIL score, the bank may offer you a loan in this situation.
Getting a secured loan may be an option if you cannot get a personal loan. Collaterals such as gold, fixed deposits, and land can be used to secure loans with low credit scores.
Even with a bad credit score, these measures are certainly helpful in getting you a personal loan. However, if you can’t pay back the loan on time, it won’t work. In addition, you will further damage your CIBIL score if you default on the loan. As an alternative, you may be able to obtain a loan against your property if you are unable to get a personal loan. Personal Loans with low CIBIL Score are often difficult to obtain. Therefore, you should take measures to improve your credit score.
Steps to Increase your CIBIL score
Make sure personal loans EMI payments are made on time, and outstanding debts are paid. Missing an EMI payment will lower your CIBIL score, and you will have to pay the penalty.
It is important not to close an old credit card account because it represents a long and strong credit history. Credit history is also a factor determining your credit score, so if you do not have another long-standing good credit account, your score will drop.
Choose repayment terms that are comfortable for you. In that way, you can pay your EMIs on time.
A minimum of loans should characterize a fixed period as your credit score is pulled down due to multiple credit inquiries against you over a short period; applying for credit again and again can decrease it.
The following measures will enable you to obtain Personal Loans with low CIBIL scores. Nevertheless, you should make sure that you have adequate funds to repay the loan. Otherwise, your credit score will plummet. This can be done with the assistance of a Personal Loan Calculator so that you can prepare your repayment in advance. You can also consider pledging assets such as jewelry or property as a last resort to get a personal loan.