HOW TO GET PERSONAL LOAN WITH LOW CIBIL SCORE ONLINE ?
Steps to get a Personal Loan with a Low CIBIL Score
Just because a few things did not work in your favor does not mean you feel hopeless. If you are applying for a personal loan and your CIBIL score is low, you shouldn’t lose heart. There are a few things you can still do that can work in your favour while applying for a personal loan.
1. Opt for a lower loan amount
Applying for a high loan amount with a poor credit score can affect your chances of approval. The higher the amount you apply for, the riskier you appear to the lender. Consider applying for a lower loan amount if you meet other eligibility criteria. The lender might be willing to offer you a lower amount. What’s more, this will also make repayment easier for you.
2. Stable Income
Another way to get a low credit score personal loan is by proving your financial capability to the lender. If you have received a salary hike recently or have an additional source of income, the lender may consider your application despite a low score. You can offer evidence of a stable job and income source, which can increase the likelihood of loan approval as it indicates higher repayment capacity. However, you may have to pay a higher rate of interest on the loan.
3. Get a co-applicant
If you have a poor credit score, you can also consider applying for a loan with a co-applicant or a guarantor. You can apply for a joint loan with your spouse, close relative, or a friend with a healthy credit score, thus leveraging their score for approval. Moreover, with the permission of your guarantor or co-applicant, you need to provide a few signatures and fulfill KYC formalities for the loan. Getting a co-applicant is more likely to increase your chances of loan approval and can even fetch you affordable personal loan interest rates.
4. Pledge a collateral
While personal loans are an unsecured form of finance, you can still check if there is a provision for collateral. You can ask your lender and consider pledging security against your loan to improve your loan application. The lender might re-consider and offer personal loan for low CIBIL score if you can offer collateral as a security.
What are the Different CIBIL Score Ranges?
| CIBIL Score | Creditworthiness | Probability of Approval |
|---|---|---|
| 600 | Needs attention | Low |
| 600-649 | Uncertain | Difficult |
| 650-699 | Satisfactory | Possible |
| 700-749 | Good | Good |
| 750-900 | Excellent | Very high |
How is the CIBIL Score Calculated?
- Payment history: Accounts for 35% of the score. Ensuring timely EMI payments positively impact the score.
- Credit utilisation: Makes up 30% of the score. A lower credit utilisation rate, less than 30%, is preferable.
- Credit type and duration: Contributes 25% to the score. You must avoid having numerous credit lines and have a diverse mix of credit types (loans, credit cards) to maintain a good credit score.
- Credit report inquiries: Factors like credit report inquiries and number of credit lines account for 20% of the score.
Eligibility to get a Personal Loan for a low CIBIL score
- Income- To avail of a loan with a low CIBIL score, you must be able to show the lender that you have a high income and repayment capacity. For this, you must provide proof of income.
- Employment- Salaried individuals working in public or private organisations can apply.
- Employment proof- Lenders also require a stable employment history and income to determine financial stability. To be eligible for a personal loan with a low CIBIL score, provide documents like salary slips and employment certificates as required by the lender.
Factors that Affect Your CIBIL Score
Applying for a cibil score is like tossing a coin. Either you get a high score or a low score. If your score is high, you can rejoice as you know your chances of getting your personal loan approved is high with better interest rates. However, what if you are in for a rude awakening when you find out that you have a low CIBIL score? Well, before you lose hope let’s consider a few factors that got you the low score in the first place:
- Your application:You know the saying “try, try till you succeed…” In this context, the multiple loan applications that you have been sending out to banks and financial institutions; be it for a personal loan, a secured loan or credit card can get you a low CIBIL Score.
- High number of unsecured loans:Too much of a good thing is, sometimes, bad enough. If you have too many loans against your name, this would be another factor that can lower your CIBIL score.
- Delaying and defaulting payments:Any missed payment or part-payment, be it for your credit card or your loan EMI, will give you a negative mark on your CIBIL score. There is a reason why your EMI structure is explained while availing a personal loan. This is so that you know how much your monthly outflow would be against your loan and you plan your finances accordingly.
- Someone else defaulting on payments:Yes, you read it right. If you are a guarantor for someone else and if that person has delayed or defaulted on their payments, it will affect your CIBIL score as well.
Importance of CIBIL Score for Personal Loans
- Increase your chances of approval: A higher credit score can increase the likelihood of loan approval.
- Fetch competitive interest rates: A good score can help fetch lower interest rates, reducing overall loan costs.
- Apply for a high loan amount: With a high credit score, you may also qualify for higher loan amounts.
- Get better repayment terms: Strong credit scores can also help you secure more favourable loan and repayment terms.
- Enjoy high negotiation power: Borrowers with high scores have better leverage to negotiate loan terms and interest rates based on their financial needs.
Can I get a personal loan without a CIBIL Score?
It may be possible to get a personal loan without a CIBIL score. To determine eligibility, lenders may consider alternative factors such as high income, employment stability, and repayment capacity.
How to improve your CIBIL score?
To improve your CIBIL score, it is important to make timely payments on all credit accounts, reduce outstanding debt, and maintain a low credit utilisation ratio. Additionally, avoid applying for multiple loans or credit cards simultaneously, and regularly check your credit report for errors and rectify them promptly.
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