personal loan against cibil score

Know How to Avail Personal Loan On Low CIBIL Score

June 29, 2022 • 24174 views

When you apply for a Personal Loan against your CIBIL score, the financial institution looks at several variables to consider your eligibility. Your credit score is one of the essential factors in this equation. The oldest credit bureau in India, CIBIL, is the source of most financial institutions’ credit scores and reports.

Your credit score (often called a CIBIL score) predicts your ability to make timely payments on a Personal Loan. A credit score of 750 or higher is typically favored by lenders and is more likely to be accepted for a Personal Loan with CIBIL score. Most large financial institutions, on the other hand, will certainly reject your Personal Loan without CIBIL score or if your credit score is bad or low.

Even though a low credit score significantly decreases your chances of acquiring a Personal Loan without a CIBIL score, there is still a chance that you can get one. However, for that, you must be aware of several elements, which are as follows:

The Importance of CIBIL Score in Personal Lending 

Your creditworthiness is assessed using your CIBIL score. The Reserve Bank of India (RBI) has permitted the Credit Information Bureau India Ltd. (CIBIL), popularly known as CIBIL, to calculate an individual's credit score.

You are considered creditworthy if you have a CIBIL score between 700 and 900. Your Personal Loan application has a better probability of approval if you have a higher credit score. The CIBIL score is based on how well you repay your current debts. Your credit score depends on timely payments on all your outstanding commitments, including credit cards, loan EMIs, etc. 

In contrast, if borrowers fail to make loan payments, their credit rating is lowered. There is a greater chance that someone with a poor credit history may be denied a loan than someone with a clean credit record.

Borrow A Smaller Sanction

Because of your creditworthiness, lenders are less likely to lend you money if your CIBIL score isn't high enough. To put it another way, financing someone with a poor credit score is riskier for the lender. 

A reduced sanction can still get you authorized for a loan. If you have a low credit score, you may receive a lesser loan from a top lender Furthermore, by borrowing a modest amount, you have the option to repay it regularly and enhance your credit score as well.

Take A Joint Loan Or With A Co-applicant

It is still possible to receive the loan, even with poor credit, if you have a co-borrower willing to guarantee the loan. As part of the loan approval process, the lender evaluates CIBIL ratings and credit profiles for both applicants. 

To increase your chances of approval, applying with a guarantor with a solid credit rating and stable finances is best. It's good if you're a co-applicant, as all applicants share the burden of repayment. It's best to ask family and friends to either co-apply or serve as guarantors if your CIBIL score isn't good enough.

Provide Income Verification To Facilitate Loan Repayment

To get a Personal Loan, the lender must be convinced that you can repay the loan. Since this is an unsecured loan, lenders consider your Personal Loan without CIBIL verification and financial documentation to determine your ability to repay. 

However, in some situations, it is possible to have a low CIBIL score but an income sufficient to cover the costs of a loan or other financial obligation. New-to-credit applicants or those with little credit history are at risk of this. Be sure to identify any other sources of income you may have if you have a poor CIBIL score. When applying for a loan, showing that you have enough money to cover your monthly instalments is essential.

Ensure That There Are No Errors On Your Credit Report

Free services allow you to examine your CIBIL report while performing a CIBIL score check. If you find any issues, this is the time to go through your profile and fix them. It's possible to get a low credit score because of unclosed credit accounts that aren't recognized as closed. 

Taking care of these issues will help you improve your credit score and acquire a loan. In addition to these mistakes, you should verify your profile to see if there are any unidentified inquiries. If you see them, it could be a sign of fraud or misuse of your personal information. Ensure all your open accounts have been confirmed and are owned by you before reporting any problems.

Personal Loan finance with a poor CIBIL score can now be obtained with the help of these tips and advice. Don't put off checking your CIBIL score for too long. To guarantee everything is in order, you should use free services to check your report regularly. It is possible to verify your CIBIL score via PAN Card. You may receive a personalized credit health report in only two minutes, giving you a clear picture of your financial situation.

By doing this, you'll be able to keep tabs on any changes to your credit profile and take action as soon as problems arise. There are ways to secure a loan even if you have a low credit score, so keep that in mind. It's essential to choose the correct lender so that you may have a hassle-free loan application process.

Also read - How to Improve Credit Score in India After Default?

Contact Your Lender To Evaluate Your Case If You Have NA Or NH

An NA or NH on your credit report indicates an inactive credit term in the last 36 months or the lack of a credit period in the same period. This means that your CIBIL report will show no credit score at all.

Tell your potential lender why you haven't used your credit card for a while. Even if the loan is granted, the interest rate may be increased.

Eligibility for A Personal Loan With Low CIBIL Score

A CIBIL score shows the creditworthiness of an individual, and how well they can repay the loan amount. It is a three-digit number starting from 300 to 900 based on which lenders lend money to the borrower. A CIBIL score ranging between 750 to 900 is considered excellent by lenders, which means the higher your CIBIL score, the greater your chances of getting quick approval on your loan.

Getting a Personal Loan for a low CIBIL score is hard, but not impossible because there can be multiple reasons why someone has a low CIBIL score. For example, late payment of credit card, errors on your credit records, multiple hard inquiries, etc. 

It is important to note that while a person with a low CIBIL score is also eligible to get loans from lenders, they must understand that the loan interest rates will vary accordingly.   

Ways to Get Personal Loan With Low CIBIL Score

When you have a low CIBIL score, it can be challenging to obtain Personal Loans. However, there are a few ways you can increase your chances of getting a Personal Loan despite having a low CIBIL score.

  • Approach NBFCs: NBFCs are more flexible when it comes to providing Personal Loans at attractive interest rates. You can check the eligibility criteria to find the loan offer that best meets your needs.
  • Joint Applicant/ Co-applicant: Another way of getting a Personal Loan with a low CIBIL score is by getting a co-applicant or a guarantor with a good CIBIL score and a stable income source.
  • opt for a Smaller Amount: It is best to apply for the exact loan amount that you require so you can repay it on time.
  • Demonstrate income statement and employment history: Lenders may consider your income stability and employment history while evaluating the loan application. If you can show a consistent income source and stable employment history, it can help you get a Personal Loan with a low CIBIL score.

FAQs for CIBIL Score

  • What is the ideal CIBIL Score you should have?
    A CIBIL score within the range of 700-900 is considered to be good. Having a CIBIL score that falls in the range of 700-900 can help you gain loan approval faster and with ease. 
  • What are the charges for checking CIBIL Score through CIBIL?
    You can check your CIBIL score for free online. Some lenders also have online tools on their websites to help you check your CIBIL score before applying. 
  • How to improve your CIBIL score?
    There are many ways through which you can improve your CIBIL score. First and foremost is to make your payments on time. Try to avoid applying for multiple loans at once, rectify errors in your credit report if there are any, and have a good credit mix. 
  • What does credit history and credit report mean in CIBIL?
    Your credit history reflects your repayment behaviour. It is a summary of how well you have managed your loans and if you have made all the payments on time. While your credit report consists of data regarding your credit instruments and ongoing loans or repayments. 

Conclusion

In conclusion, it is extremely important to understand that there are lots of factors involved when getting a Personal Loan with a low CIBIL score. A CIBIL score is one of the important factors based on which lenders provide loans. While having a low CIBIL score makes it more challenging, there are ways through which you can improve your chances of getting Personal Loans. Remember to check the eligibility criteria and focus on rebuilding your credit score over time to improve your chances of getting a loan in the future.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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