Following its contraction in the last year, the Indian economy is slowly gathering pace, with rising demands for loans and advances, be it secured or unsecured. In such a scenario, having an idea of credit score can help individuals gain an advantage over others. A recent survey has reflected that 2 out 3 Indians are not aware of their credit scores.
In case one has a less than desirable credit score, he/she should know how to avail a personal loan with low CIBIL score.
Tips to get a personal loan with low CIBIL score
Here are some pointers to help individuals avail this financial product without a good CIBIL score –
Show repayment capacity
Since personal loans are unsecured in nature, the lending risks involved with them are considerably higher. Therefore, if an individual can prove that he/she has enough income to pay off the loan easily, it may convince the lender to approve it, despite a low CIBIL score.
In this regard, one can include his/her income from various sources in the loan application to improve chances of approval.
Apply with a co-borrower
Making a joint-loan application is another way to get this financial product, even with an unsatisfactory credit score. In such cases, lenders consider the credit profile of both individuals, and if one of them has a high credit history, financial institutions may consider it.
Opt for a reduced loan quantum
Applying for a high loan amount but with a low credit score can result in a rejection, which is not ideal for the applicant’s credit profile. Individuals in such situations can instead apply for a personal loan of low quantum to further increase their chances of securing funds easily.
Negotiate to consider credit score as NA/NH
Apart from the aforementioned pointers, borrowers can communicate with their lender of preference and ask them to consider their situation as NA/NH. It means not to consider their credit score and treat them as first-time applicants.
With this process, one can avail an instant loan without CIBIL against higher interest rates.
Being aware of these pointers might help you to access a personal loan with low CIBIL. However, it has its drawbacks as well, like higher interest rates or unfavourable loan terms. Nonetheless, one can resolve this situation by taking necessary measures to improve their CIBIL score.
Top 4 ways to boost CIBIL score
Since CIBIL score vs credit score stands for the same thing, one can improve the same to enjoy the personal loan benefits. Here are some ways to do it –
Maintaining a low credit utilisation ratio
Keeping this ratio under 30% helps to increase the CIBIL score. Since it represents the credit usage of an individual, a high ratio here can reflect poorly on their creditworthiness.
2. A healthy mix of credit is welcoming
Maintaining a credit portfolio with enough mix of secure and unsecured loans can be beneficial for individuals. It shows that a borrower is responsible and knows how to handle his/her debts. It leads to an improved credit profile.
3. No delays in EMI payments
Whether it is a credit card bill or any loan EMIs, on-time payments reflect positively on one’s credit score. Regular payments can further boost a borrower’s creditworthiness. In this regard, individuals can follow some simple ways to manage their debt to ensure timely payments.
4. Refrain from making multiple credit applications
Since credit applications generate hard enquiries from lenders, making multiple loan applications at once can reduce one’s credit score. Hence, it is ideal to refrain from this practice and be judicious about credit applications.
Maintaining a reputable credit score of 750 and above is one of the best tips to take out personal loans as it can help individuals to skip the hassle of negotiations. Leading financial institutions like Bajaj Finserv disburse personal loans within 24 hours, considering that one manages to meet the credit score parameter.
The company also extends pre-approved offers to its existing customers, which can expedite this application process. Available against various financial products like business loans, personal loans etc., individuals can check their pre-approved offer via their contact details.
Availing a personal loan with low CIBIL score is not an impossible task if one can leverage the above-mentioned factors to convince a lender. However, one needs to understand that he/she is unlikely to receive better loan terms and may end up paying a higher interest rate. Hence, individuals should read the fine print carefully before signing a personal loan agreement.