CIBIL: 7 Ways To Get A Personal Loan With A Low CIBIL Score?

When you apply for a personal loan, the lender or the bank looks at various factors before sanctioning your loan amount. Since a personal loan is a loan offered without any collateral or securities, your CIBIL Score plays a huge role in determining your eligibility. In case of a low CIBIL score, your loan is at risk of being rejected. However, there are ways to avoid it and get your personal loan sanctioned.

The CIBIL score, also known as your credit score is a three-digit number given to you, basis your credit and repayment history. This score ranges anywhere from 300 to 900, and anything above 700 is generally considered a good score.

This score is calculated using your credit history found in your CIBIL Report. Your CIBIL report is also known as CIR which is an abbreviation for Credit Information Report. It includes all your credit payment history across various loans, credit institutions, credit card bill payments and more.

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As the CIBIL score ranges between 300 and 900, it is advisable to maintain a score that is as close to 900 as possible. This will help you get better deals and lesser interest on your personal loans.

Generally, it is said that a score of 700 or more is a good score. However, if your score is above 750, there’s a very high chance that your loan will get approved easily. So ideally, a CIBIL Score of 750 or above is enough for a personal loan.

While we now know what an ideal CIBIL score is for a personal loan, not everybody would’ve maintained it that well. If you fall under that category and have a low CIBIL score, you can still get your personal loan approved by trying either of the ways mentioned below:

1. Check CIBIL Report For Errors - The CIBIL Report or CIR is not always accurate. Sometimes, it might miss some latest updates that could’ve upped your credit score. Check for such errors and get them rectified to avoid facing any issues with your loan application. Sometimes, this is enough to boost your credit score to 700 or more.

2. Prove Your Payback Ability - In case there’s no error in the CIR, you can still get a loan by proving your ability to pay back the loan on time. As the CIR does not contain details of your savings, investments or fixed deposits, you can present documents proving this to affirm your ability to pay EMIs on time. Then the bank or lender may decide to approve your loan but at a higher interest rate.

3. Apply For A Joint Loan - If your CIBIL score is low, get a joint loan with a co-applicant who has a high CIBIL Score. This co-applicant can be anyone from your close relatives such as your spouse, parents, siblings or children. The lender can then sanction your loan based on their ability to pay the EMIs.

4. Get A Guarantor’s Support - If not a co-applicant, you can also get someone to be a guarantor for the repayment of your personal loan. This can be anyone; a family member, a close friend or even a trusted colleague. They just have to be a resident of the country who is over 18 years of age and has enough income to pay off the loan, in case you fail to.

5. Apply For A Smaller Loan Amount - If none of the above methods work, simply try applying for a smaller loan amount. When you try to borrow a big amount with a low credit score, it worries the lender if you'll be able to repay it. However, if your loan amount is a smaller one, you might be able to convince them to grant you a loan.

6. Request Lender To Consider NA Or NH In CIR - NA or NH is mentioned in your CIR if your credit activity has been inactive for more than 36 months. This could also be the case if you’re new to credit. In this scenario, you can convince your lender to consider your income and assets to determine your eligibility for the loan. However, you may have to pay a higher rate of interest.

7. Go For New-age NBFCs and Fintech Lenders - Your last resort would be to go to new-age NBFCs or digital Fintech lenders as they might approve your loan for a high rate of interest, despite your low credit score.

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Get that personal loan approved now. However, try to maintain your CIBIL Score for better deals in the future.