As a Personal Loan is an unsecured loan, the CIBIL score plays the most significant role in assessing the borrower’s creditworthiness. A CIBIL score of 750 and above is considered good, indicating the borrower’s ability to repay the borrowed sum without any default. With a good CIBIL score, you can obtain a high amount of Personal Loan with a lower interest rate and flexible tenure. However, a common question arises: What if your CIBIL score is below 750? Is it still possible to get a Personal Loan with a low CIBIL score? Yes, there are a few ways to avail of a Personal Loan with a CIBIL score ranging from 600 to 749.
Tips to get a Personal Loan with a low CIBIL score:
1. Ask for a lower personal loan amount:
If you ask for a high amount with a low CIBIL score, lenders may reject your loan applications repeatedly. From the lender’s perspective, a high borrowed amount is always associated with high chances of repayment defaults.
So, it’s suggested that you should optimize the loan amount (a lower debt amount with an extended tenure) in such a manner so that, you can repay the debt easily. This approach helps the lender to get confidence about debt recovery.
2. Contact with your own bank:
If you have a below-average CIBIL score, first you should contact your own bank. Many individuals maintain their salary accounts, savings accounts, and business accounts with a specific bank. Since the lender has a long-standing relationship with you and has maintained records of your credit and debit transactions over the years; in that case, they can consider your low credit score at the time of loan approval.
3. Get a loan from NBFC:
As your CIBIL score is low enough, well-established lenders may refuse your loan applications. But there are many other banks and non-banking Finance companies (NBFCs) present in India, who provides personal loan with low CIBIL score.
However, in that case, you may need to pay a high-interest rate with less favourable terms and conditions. In the digital era, you can compare among those NBFCs through their online websites and choose the most suitable deal for you. Nowadays, there are so many online platforms, through which you can secure a small personal loan even without checking your CIBIL score.
4. Apply with a co-applicant or guarantor:
If you have a low CIBIL score, you can take a co-applicant or a guarantor on board. The Co-applicant must have a steady income, a good CIBIL score and a credit history of timely debt repayments. You can approach your parents, spouse, office colleagues or friends to be a co-applicant/ guarantor of your loan.
Since the co-applicant or guarantor shares equal responsibility for repaying the borrowed amount, the lender is more inclined to approve the personal loan. It’s important to note that the co-applicant or guarantor must complete the KYC formalities and provide their signatures as well.
5. Provide your Income details:
If you are a salaried person or self-employed with a high and stable income source, you can submit proof such as salary slips or bank account statements of the last three months when applying for a loan.
The lender will review these details and calculate your debt-to-income (DTI) ratio. If you maintain a low DTI, the lender may consider your loan application more favourably, even if you have a low CIBIL score.
6. Request your lender to consider NH CIBIL score:
If you have never taken out a loan or had a credit card in your life, your CIBIL score will either be -1 or NH (No History). In such a situation, lenders may hesitate to approve your loan application due to the absence of credit records. In this case, you can try speaking with the lender and request them to consider your unique circumstances.
If the lender still denies your application, you can consider taking a gold loan or a secured credit card for a short period to start building a positive credit history & an excellent credit score.
7. Apply for a Secured Personal Loan:
Secured Personal loans are backed by collateral, such as a savings account, fixed deposit, or property. Lenders may be more willing to approve a loan if you offer collateral, as it reduces their risk. However, be aware that if you default on the loan, you could lose the collateral. Based on the collateral value, the possibility of getting a personal loan with a low CIBIL score also increase with better term & conditions.
8. Rectify discrepancies in your CIBIL report:
In some cases, unknown default loan accounts can be listed on your credit report, and such incorrect information can have a negative impact on your credit score. Sometimes, due to the negligence of lenders, your repayment history may not be updated correctly, for which a negative status can be shown in your CIBIL report.
That’s why it’s important to regularly check your credit score before applying for a personal loan. If you notice any discrepancies in your CIBIL report, you should rectify those delinquencies by raising an online dispute with CIBIL. After rectification, your CIBIL score will automatically improve.
Hope all these above mentioned tips help you to get a personal loan with a low CIBIL score.
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