Personal loans are a great tool to get you through tight financial situations. These loans have many provisions, and one of the most important is the CIBIL score. Getting a personal loan with a bad CIBIL score can be challenging but not impossible. In this blog, we will look at various ways through which you can get a personal loan even if you have a low CIBIL score.
Tips to Get a Personal Loan with a low CIBIL Score:
1. Check Whether Your Credit Score Is Truly Low
The first thing you should do is check whether your credit score is truly low. If it is, you can take a few steps to improve your chances of getting approved for a loan.
If your credit score is low, you should first check whether there are any errors on your credit report. If there are, you should dispute them and have them removed. This will improve your credit score and increase your chances of getting approved for a loan. In addition to this, make sure your credit score is updated to the latest month before you reach out to a lender for getting a loan.
2. Consider Applying for a Low Personal Loan Amount
If you request a large personal loan with bad CIBIL score, your lender may view you as a high-risk applicant. Your chances of defaulting on the loan repayment are higher, according to the lender.
If the personal loan amount is lower, the lender may be more likely to approve the loan request. In addition, repaying a reduced sum will be much easier.
3. Show Evidence of Income to Support Loan Repayments
Income is the first step in proving to lenders that you can repay a loan. Showing bank statements or payslips as proof of income can help convince lenders that you have the means to repay a loan. Additionally, providing other forms of documentation, such as tax returns, can further show your ability to repay a loan.
4. Stable Job with Reputed Employer
A steady income stream is one of the key criteria that lenders look at when assessing loan applications. Those working for reputable corporations/MNCs or public sector organisations are perceived to have greater financial security than others. As a result, lenders may approve personal loan applications from such individuals, particularly those with a steady employment history, based on their EMI repayment capacity, job stability, and company reputation.
5. Select NBFCs and Fintech Digital Lenders
Getting a personal loan with a low CIBIL score is possible by selecting NBFCs and fintech digital lenders. NBFCs are non-banking financial companies that offer loans and other financial products. They usually have more relaxed eligibility criteria than banks, making them a good option for people with a low CIBIL score.
Fintech digital lenders are another option for people with a low CIBIL score. These lenders use technology to assess loan applications and make lending decisions. They often have more flexible eligibility criteria than traditional banks or NBFCs.
6. Apply with a Co-applicant or Secure a Guarantor
It is difficult to get a personal loan with a low CIBIL score. However, it is possible to apply with a co-applicant or secure a guarantor. The co-applicant or guarantor must have a good CIBIL score in order to improve the chances of getting the loan approved.
A co-applicant is someone who applies for the loan along with the borrower. The co-applicants income and CIBIL score are considered when assessing the loan application. A co-applicant with a good CIBIL score will improve the chances of getting the loan approved.
A guarantor is someone who agrees to repay the loan if the borrower is unable to do so. The guarantor’s CIBIL score and financial standing are assessed when considering the loan application.
7. Contact Your Lender to Evaluate Your Case If You Have NA or NH
An NA or NH on your credit report reflects an inactive credit term or the absence of a credit period within the last 36 months. This means that your CIBIL report will display no credit score at all.
Explain to your prospective lender why you haven’t used your credit card in a long time. Even if the loan is approved, your interest rate could be higher.
A low credit score is not an impediment to getting a Personal Loan. Many other financial factors are evaluated to determine an individual’s creditworthiness. A low CIBIL score does not always mean a low or negative income. For example, a person working in the IT industry may get a higher fixed monthly salary with a lower CIBIL score.
Individuals with a bad CIBIL score are not automatically rejected for a personal loan. Some lenders understand that there are genuine reasons for a bad credit score and they can help you to get a personal loan in situations like this.
Author Bio: Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds.
Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.