Before approving your loan amount when you apply for a personal loan, the lender or the bank considers a number of things. Your CIBIL Score has a significant impact on whether you qualify for a personal loan because they are issued without any kind of security or collateral. Your loan could be turned down if your CIBIL score is poor. There are, nevertheless, ways to get around it and approve your personal loan.
What is a CIBIL Score ?
A three-digit number, the CIBIL score, which is commonly referred to as your credit score, is assigned to you based on your credit and repayment history. It is possible to receive a score between 300 and 900, and anything over 700 is typically regarded as satisfactory.
Your credit history, which can be seen in your CIBIL Report, is used to determine this score. The term "CIR," which stands for "Credit Information Report," is another name for your CIBIL report. It contains all of the credit payments you've made in the past for loans, credit cards, financial institutions, and more.
What Is The Ideal CIBIL Score Required for a Personal Loan?
It is advised to keep your CIBIL score as close to 900 as you can given that it varies from 300 to 900. This will enable you to negotiate better terms and pay lower interest rates for your personal loans. Typically, a score of 700 or higher is considered to be an excellent score. However, there is a very strong likelihood that your loan will be granted quickly if your credit score is over 750. Therefore, ideally, a CIBIL Score of 750 or higher would be sufficient for a personal loan.
7 Ways To Get A Personal Loan On Your Low CIBIL Score
Despite the fact that we now know what a good CIBIL score is for obtaining a personal loan, not everyone would have kept it up so well. You can still get your personal loan accepted if you fit that description and have a poor CIBIL score by attempting either of the methods listed below:
1. Verify Any Errors In The CIBIL Report
It's not always possible to trust the CIBIL Report or CIR. The most recent modifications that might have improved your credit score occasionally get missed. To prevent having your loan application rejected, look for these mistakes and have them fixed. Your credit score may occasionally increase to 700 or higher if this is sufficient.
2. Demonstrate Your Ability to Payback
By demonstrating your ability to repay the loan on time, you may still be approved for a loan even if the CIR is accurate. You can provide papers demonstrating that you are able to pay your EMIs on time by pointing out that the CIR does not include information about your savings, investments, or fixed deposits. The lender or bank may then opt to grant your loan but at a higher interest rate.
3. Make a Joint Loan Application
If you need a loan and your CIBIL score is poor, apply jointly with someone who has a good CIBIL score. Your spouse, parents, siblings, or children are just a few examples of your close family who may serve as co-applicants. Afterward, the lender can approve your loan based on your capacity to make your EMI payments.
4. Obtain a Guarantor's Assistance
You can also find someone to serve as a guarantor for the repayment of your personal loan if they are not a co-applicant. Anyone can do this, whether a member of the family, a close friend, or even a reliable coworker. The only requirements are that they are a citizen of the nation, at least 18 years old, and have a steady source of income to cover the loan in the event that you are unable to.
5. Fill Out A Smaller Loan Application
Simply try applying for a smaller loan amount if none of the strategies mentioned above don't work. When you apply for a large loan with a low credit score, the lender is concerned about your ability to repay it.If your loan request is for a smaller sum, you might be able to persuade them to give you the money.
6. Ask The Lender to Take NA or NH Into Account
Depending on how long your credit activity has been inactive (more than 36 months), NA or NH will be listed in your CIR. If you have little or no credit history, this can also be the case. You may be able to persuade the lender in this situation to take your income and assets into account when determining your loan eligibility. It's possible that the interest rate will be greater.
7. Take Advantage of Modern NBFCs and Fintech Lenders
Your final resort would be to turn to modern NBFCs or online Fintech lenders, who might still approve your loan despite your bad credit score and a high rate of interest.
This means that you can still receive a personal loan despite having a low CIBIL score. However, you could not receive the finest loan terms and the interest rates would be exorbitant. Through the methods listed above, you can also obtain a personal loan without a CIBIL score. However, these are all time-consuming procedures. Therefore, even if it is a drawn-out process, it will be advisable to raise your CIBIL score before applying for the personal loan.