In India, financial illiteracy has been a persistent issue where individuals do not have detailed knowledge regarding key factors, such as interest rates, CIBIL score, eligibility parameters, etc. For example, although CIBIL score is one of the essential determinants to assess borrowers’ credibility for availing a loan, most borrowers do not have a fair understanding of its importance.
Usually, lending institutions extend high-value credit, such as personal loans, to borrowers with a CIBIL score of 750 and above. Fortunately, there are various effective ways through which borrowers can avail of a personal loan with low cibil score.
Ways to get a personal loan with a low CIBIL score?
According to a survey, 68% of borrowers do not possess fair knowledge about their credit score and pay no heed to this important aspect while availing of a loan. Resultantly, novice borrowers with a poor CIBIL score face loan rejection. Therefore, borrowers with a poor or no credit score can follow the steps suggested below to improve their possibility of getting a personal loan with a low CIBIL score.
Step 1: Include additional income source
Every financial lender thoroughly assesses a borrowers’ capability of repaying a loan. However, since personal loans are an unsecured form of credit, lenders need more assurance before approving loans to avoid defaulters. Therefore, this factor becomes an obligation for the borrowers who want to avail of a personal loan with a low CIBIL score.
In such cases, intending borrowers can provide their additional sources of income, such as rents, investments, interests from different funds, etc. Besides, an increase in salary and proof of stable employment will increase loan eligibility and sanction a personal loan for a low CIBIL score applicant. However, borrowers must note that they may have to pay a higher interest rate in such cases.
Step 2: Apply for a low amount
Considering the poor CIBIL score scenario, lenders may consider such individuals as high-risk applicants. This is because, from the lender’s perspective, the defaulting rate is higher in such cases. However, if individuals apply for a lower loan value, there are chances of getting the loan approved. Also, the repayment of the loan amount will be more convenient. Therefore, borrowers must know the ideal CIBIL score for a personal loan before applying to avoid loan rejection.
Step 3: Apply with a co-applicant or a guarantor
Borrowers with a low CIBIL score can avail of personal loans by applying for a joint loan. A co-applicant with a healthy credit score can ensure a faster loan approval. The presence of a co-applicant will allow borrowers to avail better deals on loans. The primary borrower must ensure that the KYC formalities are completed, and necessary documents are submitted.
Besides, borrowers seeking to avail of an instant loan without CIBIL can apply with a guarantor to avail of the credit. However, one must ensure that the guarantor possesses a good credit rating and a clear history before application. Having poor financial standing and numerous obligations can become obstacles to availing of loans in the future.
Step 4: Keep credit report error-free
TransUnion CIBIL efficiently maintains and updates online credit reports of borrowers. However, there are a few instances where minor mistakes in the report show low scores in the credit report. This can create issues while applying for a personal loan and further lead to rejection.
Therefore, it is essential to check on the credit report periodically and raise issues if any error is found. Besides, borrowers must also know about the easy approval tips for a personal loan and implement them to enhance loan eligibility.
Also, borrowers can opt for a low credit score loan app to conveniently explore a wide range of financial products. Besides, it allows individuals to borrow and repay their loan amounts on the scheduled date through reminders.
Besides knowing how to get a personal loan when you have a bad CIBIL score, one should adopt certain measures to strengthen their loan eligibility. This includes factors like timely repayments, paying off existing debts, a healthy mix of credits, etc.
Apart from these factors, individuals must try to maintain their credit utilisation ratio to save substantially and make timely repayments. Therefore, eligible borrowers can get customised offers and services in the form of pre-approved offers, making loan applications hassle-free and simplified. Individuals can check their pre-approved offers by submitting their name and contact information.
Although these effective measures will allow borrowers to avail of a personal loan with a low CIBIL score, one needs proper financial planning to repay on time.