When uncertainty arises, taking a personal loan is the first course of action that people consider. A personal loan can assist people in securing money for short-term needs such as travel, medical issues, or any other short-term expenses in the midst of the urgency of accessing funds.
However, as a justified practice, the lender will check your credit score before sanctioning a loan. Having a low CIBIL score might lower your chances of securing a Personal Loan. CIBIL (Credit Information Bureau India Ltd.) is an agency authorized by the Reserve Bank of India (RBI) to determine and calculate an individual’s credit score. CIBIL score represents a person’s creditworthiness.
An individual’s CIBIL score can be affected by various factors such as credit type, credit exposure, payment history, and loan duration. Taking care of loan repayments on time and lower exposure to credits will lead to a higher CIBIL score. Failure to submit payments on time, frequent loan requests, defaulting on a loan, and poor financial hygiene are some factors that can lower your CIBIL score.
If you have a high credit score, you can avail of a Personal Loan easily as compared to an individual with a low credit score. A CIBIL score ranges from 300 to 900. A CIBIL score that is more than 750 is considered great, while a CIBIL score of 550 or less will hinder the process of loan application. Lenders and financial institutions may increase the interest rate on loans or may not sanction the loan.
On the bright side, it is possible to get a loan against a poor CIBIL score. You can also check your CIBIL score online before applying for a loan. In this article, we will discuss ways through which you can get an instant loan on low CIBIL score.
- Prove that you can support repayment
If you have received an increment in your salary, it might increase your chances of securing a loan on low CIBIL. In addition to this, if you have additional sources of income, for instance, a small business, the lender might consider your loan application. Having a stable job and monthly income can be communicated to the lender to avail of an instant loan on low CIBIL score. However, the lender may increase your interest rate on the loan sanctioned. - Apply for a lower loan amount
Requesting a lower loan amount might increase your chances of getting an instant loan on low CIBIL score. Asking for a high loan amount might induce suspicion in the lender’s mind and indicate the inability of making timely repayment. If your CIBIL score is low, the lender might consider it a risk to sanction a loan because of chances of loan default. When the requested loan amount is low, the lender may feel comfortable while sanctioning the loan as it can be easily repaid. - Apply for a joint loan or get a guarantor
You may be perceived as a ‘high risk’ candidate if your CIBIL score is low. Getting a guarantor or applying for a joint loan may get your loan approved faster. However, the other applicant for a joint loan should be willing to take the responsibility for payment in case of default. If you fail to deposit the regular payments, the liability of the amount falls on the guarantor. A co-applicant or a guarantor with a good CIBIL score will generate trust among lenders, thereby elevating your chances of getting a loan against poor CIBIL score.
Also Read :- Top 8 Factors Affecting on CIBIL Score
- Fix issues in the credit report
Updating your credit report in a timely manner is essential for maintaining a good CIBIL score. Sometimes certain entries might not be recorded in your report or may contain errors. This also happens when the latest information is not updated. Such mistakes can hamper your credit score. Hence, it is essential to keep a track of your credit report. You can check your CIBIL report for free online and update it from time to time to improve your CIBIL score. - Show NA or NH in the credit score report
The term NH (-1) on the credit report shows that you do not have any track record or credit history. NA (0) denotes that no credit history is available. These terms are not considered ‘bad’ as the borrower might be new to the credit system or might have not used credit cards for any payments for the past couple of years. This also means that the borrower does not have any credit vulnerability as he/she has add-on credit cards that are not being used. In such cases, some lenders might consider your application for instant loan on low CIBIL score.
Moving Forward
Despite having a poor credit score, getting a Personal Loan is not impossible in today’s moving world of finance. Maintaining a good credit score is essential, however, for modern-age borrowers and for those who are new to credit systems, having a low credit score might not matter much if they are able to show a stable monthly income, request for a lower loan amount, have a guarantor or a co-applicant, and keep their credit reports up to date.
Whether you are planning for higher education, hosting a wedding, or have a medical emergency, we have got you covered. At Credit Success, we offer Personal Loan to cater to your diverse financial requirements, without any restriction on the usage of funds.
With Credit Success Personal Loan, you can repay your loan in a tenor of up to 60 months with lower EMI. Besides this, there’s no need to pledge any collateral with us. After you fulfill the basic criteria for eligibility and submit the required documents, your loan will be approved shortly.
We have no hidden charges and no penalty for prepayment and foreclosure. Our free Personal Loan EMI Calculator is easy to use so that you can select the right loan amount and EMIs suitable for you. You can apply for Personal Loan and avail of special discounts and offers as well.
