CIBIL score is essential if you need a Personal Loan to meet your unplanned, urgent, or significant financial obligations. Banks and NBFCs generally prefer applicants with a high CIBIL score over the ones with low or average scores. Notably, the CIBIL score directly relates to an applicant’s loan repayment capacity and tendency.
Therefore, a significantly low CIBIL score can negatively impact your eligibility for a need a Personal Loan. It portrays you as someone who may struggle to repay the loan, eventually making the banks reject your loan application.
You can avoid such situations and get a Personal Loan despite a low CIBIL score by following the suggestions or instructions mentioned in this article.
So, let us proceed and learn more about the CIBIL score and the ways to get a Personal Loan if you have a low CIBIL score, that too at competitive Personal Loan rates:
What is a CIBIL score?
It is a calculative and numeric representation of an individual’s financial history. In simpler terms, it is a three-digit number calculated based on an applicant’s credit history. It establishes if a loan applicant is financially responsible.
A CIBIL score can be anywhere between 300 to 900. A person with a score of 750 and above is considered creditworthy by the bank and easily qualifies for a loan or credit card.
What is the importance of a high CIBIL score for getting a Personal Loan?
A high CIBIL score helps a bank trust an individual to advance a loan. It establishes the surety of loan repayment from the borrower’s end. It also makes an applicant or borrower eligible for a loan at lower interest rates and easy terms without requiring a guarantor, co-applicant, or collateral.
Overall, it speeds up getting a Personal Loan on easy and convenient terms. However, you need not get discouraged, overwhelmed, or disheartened if your CIBIL score is below 750, as there are ways through which you can still apply for a Personal Loan and get it approved by the banks or NBFCs without facing any significant struggle.
How to get a Personal Loan even after having a low CIBIL score?
Although an individual needs a minimum CIBIL score of 750 to get a Personal Loan, you can still get it with a score lower than the minimum requirement range by going through the steps mentioned below:
Prove your income is sufficient to repay the loan amount with interest
Convince the bank that you have a stable additional source of income like rent, any commission, freelance jobs, etc. It would establish you can pay the monthly EMIs of the loan. This will help you get the loan, but you might also have to pay a higher interest rate.
Reduce your loan amount
Getting a heavy loan with a poor CIBIL score is challenging. You can improve your chances of getting your loan approved by reducing your loan amount and asking for a reasonable sum that is easier for you to repay. This way, the lender might approve your loan application and grant you the quoted amount.
Include a guarantor or co-applicant
Including a guarantor or a co-applicant can be helpful if you need a Personal Loan with a low CIBIL score. You can ask a family member or friend with a good CIBIL score to become your guarantor or co-applicant, increasing the bank’s trust in your loan repayment capability. If you have someone with a good CIBIL score in your family, you can quickly get a Personal Loan at reasonable rates and conditions.
Recheck your CIBIL report for any possible mistakes
Sometimes, an error in the CIBIL report can also lead to a low CIBIL score. Incorrect information or transaction history can also affect or lower your CIBIL score. Make sure to check your report once in a while and get it rectified to maintain a good CIBIL score and quickly get a Personal Loan.
Arrange for a collateral
The last viable alternative is to offer collateral against the loan as a surety or conformity of loan repayment. You can provide your property as collateral to avail of the Personal Loan.
What factors can lead to a low or reduced CIBIL score?
Knowing the factors leading to a poor or low CIBIL score can help you stay alert and attentive to avoid facing situations and circumstances leading to difficulty getting a Personal Loan. Let us take a quick run through the list of factors that can affect your CIBIL score:
History of credit
Timely payment of your loans, bills, and debts can automatically lead you to a good credit score. A good credit history will make the bank instantly grant you the required loan amount at competitive Personal Loan rates.
Limit credit utilisation
A high credit utilisation lowers your CIBIL score by increasing your credit burden, whereas a low credit utilisation lowers your credit burden and increases your credit score.
Applying for multiple loans simultaneously
Applying for multiple loans simultaneously can make you appear credit hungry. So, avoid applying for various loans at the same time.
Inappropriate credit report
Keep checking your credit report for any mistakes and irregularities that might negatively affect your report and inhibit you from maintaining a good CIBIL score.
Here’s a summary of the points mentioned in this article to help you make a well-informed decision.
- To have a good credit history, maintain an excellent CIBIL score by paying your bills and credit on time.
- If you have a low CIBIL score, you can still secure a loan by following the steps mentioned in this article, like reducing the loan amount, having a guarantor or co-applicant, providing collateral, etc.
- You can take the suggested precautions to avoid the factors responsible for a low credit score.
These points effectively establish the possibility of acquiring a Personal Loan, irrespective of your low CIBIL score.