How can you get a personal loan on a low CIBIL score? Learn Now

personal loan on a low CIBIL score

You must present your needs to a lender whenever you desire a personal loan. On the other side, the lender would like to determine how creditworthy you are as a borrower. Your capacity to make on-time payments on the personal loan is referred to as creditworthiness. The lender would also like to look into your prior credit history or your record of how you have handled loans in the past and present. This is known as your credit score also known as CIBIL score. CIBIL score is a three-digit numeric score which indicates an individual’s creditworthiness. Individual CIBIL scores are generated by the Credit Information Bureau India Limited. A CIBIL score between 750 to 900 is considered a good score and most lenders approve your request for a personal loan.

You can also read our article the 5 Best ways to Borrow money online in India.

Low CIBIL score? Don’t worry! Invest In The Money Club to fulfill your needs!

Can You Get A Personal Loan On A Low CIBIL Score?

While most leading bankers are quite particular about the CIBIL score, there are certain lenders who can help you borrow funds when you need them. They may be willing to negotiate the credit terms to offer a loan to you. A low CIBIL score means that you are a risky customer and banks are not quite willing to offer you a loan. A CIBIL score is usually based on loan repayment history; whether you have defaulted or pre-closed any loan and the types of loans you have taken in the past. If you need a personal loan and you have a low CIBIL score, you can find some lenders who will be willing to offer a personal loan, but they usually charge a high rate of interest.

Some lenders even charge up to 30-40% p.a., which is very high. Many fintech platforms and NBFCs like Credit Sudhaar Finance, Loanbaba, Lendbox, Vintage Finance, Home Credit offer personal loans despite a low CIBIL score.

 

How to Get a Personal Loan on Low CIBIL Score

While most leading bankers are quite particular about the CIBIL score, there are certain lenders who can help you borrow funds when you need them. They may be willing to negotiate the credit terms to offer a loan to you. A low CIBIL score means that you are a risky customer and banks are not quite willing to offer you a loan. A CIBIL score is usually based on loan repayment history; whether you have defaulted or pre-closed any loan and the types of loans you have taken in the past. If you need a personal loan and you have a low CIBIL score, you can find some lenders who will be willing to offer a personal loan, but they usually charge a high rate of interest.

Some lenders even charge up to 30-40% p.a., which is very high. Many fintech platforms and NBFCs like Credit Sudhaar Finance, Loanbaba, Lendbox, Vintage Finance, Home Credit offer personal loans despite a low CIBIL score.

 

It is undoubtedly challenging to get a personal loan approved if a person has a low CIBIL score. Also, a personal loan with a low CIBIL score has a higher rate of interest. Here are a few ways that can help you to get a personal loan with a low CIBIL score.
Choose NBFC:NBFCs or non-banking financial companies usually have more lenient policies as compared to banks, for individuals with a low CIBIL score. Choosing an NBC would be best if you have a low CIBIL score and are looking for a personal loan.
Apply for a lesser loan amount: Opt for a lower amount instead of applying for a higher amount. This way it will be easier to repay the amount on time, and will add to your credit score. Once the loan is cleared, you can apply for another loan and proceed in the same way. This will establish your credibility as a borrower, and you’ll be able to obtain a larger amount of loan in the future.

Buy your latest mobile on EMI without credit card

Give proof of your income: Banks and NBFCs take into account things like your present salary and source of income before confirming your loan request. When applying for the personal loan, you can offer bank documents showing your increase in salary, annual bonus, and other sources of income. It will compensate for your low CIBIL score and also prove your ability to repay the loan on time.
Apply for a joint loan: If any family member or friend has a high CIBIL score, you can choose to apply for a joint loan. It will definitely increase your chance of getting a personal loan even with a low CIBIL score.
Apply with the help of a guarantor: Having a guarantor with a high CIBIL score increases your chances of getting the loan. You will get a better deal and your loan will be approved faster.
Choose secured loans: If your loan application is being hampered by your low CIBIL score, you can obtain a loan by providing collateral, such as real estate, gold, fixed deposits, and so forth. Low CIBIL scores may be disregarded for these loans because they are secured.
 Improve your CIBIL score: The above mentioned ways can help you in getting personal loans even with a low CIBIL score. But, there is no substitute for a higher CIBIL score as most banks reject applications of the loan with a low CIBIL score. You need to manage your credits skilfully and clear your debts on time to improve your CIBIL score.

What is chit and how does it help save and borrow money?

P2P Lending - an Alternative to Banks And NBFCs

Apart from banks, there is another option that you can try if you have a low CIBIL score and wish to get a personal loan. 
Peer-to-Peer Lending (P2P Lending) – There are some lending websites, called P2P websites, that offer loans to people with low CIBIL score.
It is an alternative financing method which allows individuals to avail loans from other individuals through online lending platforms. Through these platforms, people who are in need of unsecured personal loans can get in touch with investors who are willing to lend money with the motive of earning a higher rate of interest on their investments. Investors can go through a list of verified borrowers and their details on these P2P lending platforms before they lend money to them.
P2P lending is also known as crowdfunding or social lending and is increasing its popularity among borrowers and investors in India. India has its own version of the age-old custom of community lending, known as chit funds. They are a pooled form of lending. Chit funds have taken a new digital form in digital chit fund apps and are also a type of peer to peer lending. You can plan the purchase of your favourite and latest mobile phone on EMI without credit card using a chit fund. The interest cost, paperwork and sureties required are much lesser in comparison with a personal loan.

Get money for all your needs, Join The Money Club Now!

Reasons for a Low CIBIL or Credit Score

  • Your CIBIL score gets lower when you take too many unsecured loans.
  • The credit limit on each credit card is determined by your income level and credit history. High credit utilisation, which lowers your credit score, is defined as having an outstanding balance that exceeds 30% of your credit limit.
  • Not paying your debts or EMIs on time or in full will bring your CIBIL score down.
  • If a person seeking personal loan is rejected by multiple banks, it is not seen as a good sign. Every time you apply for a loan, your bank asks for your credit information. Your CIBIL score goes down each time any inquiry on your credit information is made.
  • Making a settlement with the bank and closing outstanding credit by paying less amount than the actual dues have a negative impact on your credit score.

Ways to improve your credit/CIBIL score

  • If you don’t need a loan right away, you can start working on raising your credit score right away. This will guarantee that you never again have a loan application denied. The following advice can help you raise your credit score.
  • Pay off credit card bills in full every time. Do not resort to paying only the minimum due.
  • Use the credit card only so much which you can pay back in full every month.
  • You can choose to get a secured credit card if you do not have a credit card, and no lender is willing to give you one. You can open a fixed deposit with the bank and get a credit card for up to 80% of this deposit. Use only about 30-40% of the available credit limit and pay your bills on time and in full.
  • Applying for too many loans and getting rejected lowers your CIBIL score.
  • A single type of credit card does not benefit your credit score. Your CIBIL score will increase if you have some credit cards, loans and you are good at managing them skillfully.
Don’t worry if you want a personal loan and have a low credit score, you can always pull it up. Having a score above 700 ensures that your loan application is always approved!

To meet your growing needs invest in digital chit fund platform

Conclusion

Getting a loan for low CIBIL score applicants is no longer a distant dream. You can now avail personal loans from various banks, NBFCs and P2P lending platforms at competitive rates, minimal documentation, and other advantages.