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written by | June 28, 2022

Get Personal Loan For Low CIBIL Score: Learn How

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It is quite a challenge for several individuals to maintain a good credit score consistently. A credit score below 700 makes it difficult for such individuals to obtain a personal loan. All personal loans are considered to be unsecured loans which make a majority of banks offer personal loans to individuals with a score of 750 or more than 750. A poor CIBIL score casts immediate doubts on a person’s creditworthiness. It corroborates the fact the individual has an unimpressive credit history and never pays bills on time. Banks and established financial lenders reject applications for personal loans from individuals with a credit score below 700. Banks and money lenders consider such individuals a big risk. However, such individuals should not get disheartened. Today, it is possible to avail of a low CIBIL personal loan though the accompanying rates of interest are very high. You should try to rectify your poor credit scores at every opportunity you get. You should avoid late payments of your bills and try to reduce your debts slowly but surely. Once you start improving your score, try maintaining it. This will prove to be extremely helpful in procuring a personal loan.

Did you know? You can obtain a personal loan even if you are jobless but can furnish collateral or get a co-signer?

Tips to Get a Personal Loan on Low CIBIL Score

Let us explore the various possibilities of procuring a personal loan despite having a poor credit score.

Furnish Details that Your Income can Support EMI Payments

Many loan applicants are ignorant about the various ways in which you can improve your credit score. If you have a steady job, you must share details of your bank statements. You can also share details if you have another source of income, e.g. if you work elsewhere over the weekends. If you have a letter from your place of work stating that you or you are expecting a raise in your pay package, you can furnish that as well to the bank. These will help establish that you will honour your payments. When you have a poor CIBIL score, finance lenders prefer to ask you for such documents. These reaffirm their trust that you will be able to make timely repayments if the loans are sanctioned to you. Before furnishing documents, ensure your pending payments, if any, have been cleared, whether previous loans or credit card payments. This helps increase the approval ratings for the loans you apply for. Also, you can check your CIBIL score simply by CIBIL registration on the official website.

Also Read : What are the Factors Affecting Your CIBIL Score?

Ask for a Small Personal Loan Amount

If you know your credit score is poor and you still apply for a large loan, rest assured, it is going to be rejected. A CIBIL score below 700 does not serve to qualify for a loan, especially a big amount. This score is a clear indication of your inability the repayment of your outstanding payments. These could be EMIs or even payments towards your credit cards. Moneylenders are always wary about weak credit scores and are quick to reject applications for big amounts of loans. If you can assure them with the above-said documents and apply for a smaller loan, you stand to get approval. This will also ease the process of repayment as the amount will be smaller and improve your credit score as well.

Apply With a Co-signer or Secure a Guarantor

If you have a close & trusted person who can act as a co-signor, the process of obtaining the loan becomes easier when you don’t have a good credit score. A co-signer or a co-applicant can be a very close friend or even a family member. When you apply for a loan with a co-signer, a standard credit application has to be made for both. The underwriting authorities then review the credit scores of the applicants. The application is scrutinised, and the loan amount is sanctioned based on the one with better creditworthiness.  This has its own advantage. Co-signers with higher creditworthiness help obtain the loan at a lower interest rate. They also help in obtaining a larger amount of loan than the person with a low credit score. The principal amount is increased, and it helps the individual to meet their debt payments.

Correct Mistakes in Your Credit Report

‘To err is human’ and this does not exclude banks and financial authorities. You should keep a constant watch on your credit score reports. Sometimes, the last payment towards a loan or credit card payment may not reflect for various reasons. Applying for a loan will showcase you as a defaulter and reduce your CIBIL score. This impacts your loan application negatively. A credit score that erroneously reflects a low score can be rectified on the official website of CIBIL for free. When you spot such mistakes, correct them immediately, as it will ease the process of obtaining a loan. Sometimes, due to hacking or any other technical glitch, you may spot some strange enquiries on your personal account which are totally alien to you. You should report these immediately. You are the sole owner of your credit score accounts, and any enquiry from an unrecognisable source must be reported at once. In addition to these precautions, do not cancel your credit cards out of frustration if you cannot get a loan. You would have a good credit score in the past, and you will lose all that if you cancel your credit cards.

Also Read: How to Maintain a Good CIBIL Score? | Significance, Advantages, Ideal CIBIL Score

Request Your Lender to Consider Your Case with NA or NH 

The abbreviations ‘NA’ and ‘NH’ stand for ‘Not available’ and ‘No history’ in your credit score report. NH also implies that the credit details attributed to you are not enough to give you a credit score. It also implies that you are new to the system and you have no outstanding credit dues in the previous few years. These details improve your loan approval chances as they define you as a no-risk individual. The abbreviation of NA implies an absence of credit history. In simple words, it denotes that the individual's credit history is less than six months old. While these two terms come across as a silver lining for individuals with a poor credit score, many money lenders choose to sanction loans to individuals with an NA or NH credit history.

Conclusion:

This article gives an insight into how individuals with poor credit scores can still avail of a loan provided they fulfil certain conditions. Some of these include applying for the loan with a co-signer or a guarantor, providing proof of your salary income, and bank statements affirming a steady income flow. Details of an additional source of income also assist in the approval of the loan application. Unless you are able to convince the finance lenders about your credibility, the process of obtaining the loan becomes very difficult. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: Can a co-applicant help a person with a low CIBIL score to obtain a personal loan easily?

Ans:

Yes. A co-applicant with a higher credit score definitely eases the loan application approval. However, the finance lenders check both applicants' credit history and, once satisfied with the co-applicant's CIBIL score, sanction the loans. Under such conditions, the banks or other finance lenders tend to increase the principal amount as well. They even lower the interest rates as they are assured of the co-applicant’s flawless credit history.

Q: Define low CIBIL personal loan?

Ans:

A low CIBIL personal loan defines the possibilities of obtaining personal loans on a low CIBIL score. A low CIBIL score is below 700, and banks and financial lenders refuse loans against such scores as they do not establish the individual's credit worthiness.

Q: How to get a personal loan with a low CIBIL score?

Ans:

You can get a personal loan on a low CIBIL score under the following conditions:

If you have a credit history of timely payments in the past

You have a co-applicant or can get a trusted source to act as your guarantor

You have a steady job – you can provide your salary slips as proof

Request a loan based on a ‘NA’ and ‘NH’ in your credit score report– these imply no prior credit history of defaults.

Q: Which finance-lending entities offer assistance if you need a personal loan with a bad CIBIL score?

Ans:

Many banks and money-lenders will sanction loans to you if you can prove you have not defaulted on large amounts of money in the past. A co-signer with good creditworthiness will help you procure the loan on better terms. Some of these could be a higher principal amount and a lower interest rate.

Q: Is it easy to get a personal loan with a low cibil score?

Ans:

Yes, your loan application can be approved despite a low CIBIL score if you are able to:

  • Provide proof of a regular job salary
  • Furnish the money lenders with your personal bank statements
  • Apply for the loan with a co-signer
  • Ensure that you have no wrong credit history, and if you do, you should correct it before applying for the loan.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.