If you are looking for a Personal Loan, a good CIBIL score makes the job easier for you. It becomes a proof of your eligibility and repayment capacity. CIBIL score is the first thing lenders check while assessing a Personal Loan application. However, if you are someone who needs a Personal Loan with a low CIBIL score, this guide will help you explore your options.
Your CIBIL score reflects your credit habits and indicates how well you have handled debt in the past. It’s a 3-digit number (ranging from 300 to 900) that takes into account various factors such as your repayment history, amount owed, credit mix, credit age, and any new credit. A lower credit score indicates poor credit management and might result in loan rejection. On the other hand, a high CIBIL score of 700 and above projects you as a reliable borrower, increasing your loan approval chances. A low credit score makes lenders hesitant about making lending decisions.
A hike in salary or an additional source of income may make the loan provider more confident about your loan application. Show evidence of a secure job and steady cash flow to improve your likelihood of easy loan approval.
Lenders may perceive you as a high-risk borrower if you demand a high loan amount with a low credit score. From the loan provider’s perspective, you have a higher probability of loan default in such a situation. Consider applying for a smaller loan amount to reduce the lender’s risk, making it easier for them to grant the loan. The repayment for a lower loan amount will also be easier on your pockets.
If you are looking for a Personal Loan with a low CIBIL Score, getting a guarantor can speed up the approval procedure. A guarantor assures the lender that, in the event of default, the guarantor will assume responsibility for the loan. Getting a guarantor with a good CIBIL score will improve your loan eligibility and make it easier to obtain a personal loan.
In case your CIBIL score is low despite maintaining a good repayment history, you should check your credit report thoroughly. Your credit report may still have errors that are not your fault. It usually happens when your credit company does not report your latest credit-related information to the credit bureau. Errors like these can keep your credit score low and make it challenging to get a loan. Ensuring a timely check on your credit score and keeping your credit report error-free is important. Platforms like OneScore allow a free online check of your CIBIL score to help you identify errors and resolve them in time.
Alternatively, you can add a co-applicant to your loan application while applying for a Personal Loan with a low CIBIL Score. A co-applicant is someone who co-applies for a loan and agrees to repay the loan with the primary borrower. Since the credit score of the co-applicant directly impacts your loan eligibility, you must ensure they have a high credit score.
Credit bureaus mark a period of no credit activity for the last 36 months as ‘Not Active’ or NA in the credit report. It happens when the credit bureau does not receive any information about your credit-related activity for the past few months. With no recent credit history, credit companies cannot determine your financial position or how efficiently you handle credit. In such a case, they can consider your case with an NA and offer you a Personal Loan with a low CIBIL score.
Lenders may consider your case with an NH if you have no history of credit. It often happens when you are new to the world of credit and have never taken a loan or credit card in the past. Since the lenders have no record of your repayment history, they can take a risk in your case, though at a higher interest rate.
If you have an existing relationship with a particular credit company, consider reaching out to them first. The company will have all your credit account details, repayment history, cash flow, and prepayments. If you have a strong history of consistent repayments but have recently reduced your credit score for various reasons, they may still approve your loan based on your past records.
Traditional banks have strict eligibility conditions that make borrowing difficult for borrowers, let alone those with a low credit score. On the other hand, NBFCs are Non-Banking Financial Companies that want to increase their profits by lending to a maximum number of borrowers. Thus, they keep their eligibility requirements as simple as possible to attract more borrowers. NBFCs are easier to convince, as they have flexible loan terms for more efficient credit management.
While you may get a Personal Loan with a low CIBIL score using the above methods, try improving your eligibility by using strategies to increase your credit score.
1. Pay off existing loans. Consider consolidating your debt if you have multiple high-interest credit card debts or loans.
2. Diversify your credit profile. Maintain a mix of credit cards and loan. Keep your old accounts active.
3. Reduce your debt-to-income ratio. Keep your credit utilisation rate low.
Once you achieve a score of 700 or above, it becomes easier to get a personal loan with lower interest rates and better terms and conditions.
Additional Read: Understanding Personal Loan Interest Rates
Want a low CIBIL personal loan? Follow these tips to ensure a good credit score:
Personal Loans can be of great help when you find yourself in need of instant funds. Before sanctioning your loan application, lenders check your credit score to determine your credibility. That is why checking your CIBIL score before applying is crucial to ensuring loan eligibility. OneScore is a reliable platform that allows you to check your CIBIL score for free online, based on which you can make your borrowing decision. You will also get free insights on how to improve your credit score and increase your loan eligibility with better terms and conditions.
If you are looking for a Personal Loan with a low cibil score, show a high income and repayment capacity. This increases your chances of getting approved for a loan.
Yes, getting a personal loan with a CIBIL score of 500 is possible, provided that you have a decent income and a consistent repayment history.
Yes, you can request that the lender consider your case under NA or NH if you have a zero CIBIL score.
A CIBIL score of minus 1 means that you do not have a credit history because you have not obtained any credit in the past.
Maintaining a high CIBIL score is crucial, as it is an important parameter that plays an essential role in getting credit card or loan approval.
To improve your credit score and stay creditworthy, use OneScore OneScore
**Disclaimer: The information provided in this webpage does not, and is not intended to, constitute any kind of advice; instead, all the information available here is for general informational purposes only. FPL Technologies Private Limited and the author shall not be responsible for any direct/indirect/damages/loss incurred by the reader for making any decision based on the contents and information. Please consult your advisor before making any decision.
- OneScore , September 21, 2023