Availing of a personal loan instantly is impossible in 90% of cases. To avail personal loan, the lender and borrower as well need to follow some protocols. A lender will always go through the credit score of an applicant prior to bestowing the personal loan. This is the reason why many people experience rejection of their loan applications because of inadequate CIBIL score. However, it is also a relief that these days personal loans are indeed available for people carrying a squat CIBIL score. Just by following some easy steps, you can easily acquire a personal loan if you are not having much credit score. Utilizing a loan worthiness checker is always recommended before applying for one. This will let you know whether the CIBIL score you actually have is adequate or not.
Let us begin by understanding what the CIBIL score actually means.
Significance of CIBIL score
A personal loan is the need of almost every individual in the present times. Suppose you apply for a loan and eagerly wait for its approval but then experience rejection. Such situations can be quite demoralizing. It is best to check whether you are eligible for a loan or not by taking help from an eligibility checker. These tools will showcase the correct CIBIL scorethat is a sign of the creditworthiness of an individual. This is a measure that the Reserve Bank of India takes into account before offering a loan to any individual. The higher the credit score, the higher is the scope of loan approval.
CIBIL score of an individual depends solely on the repayment record of the present debts. This is why always people receive reminders for making timely payments on every outstanding debt such as loan EMIs and credit cards. This will always guarantee high scores for any person. Defaulting in any loan repayment will automatically lead to score reductions. Credit history needs to be healthy for every person in the present times for easily availing loans.
The perfect candidate for all kinds of personal loans is the one carrying a score of more than 750. When the score is less than 550, it can result in rejection or a very high rate of interest. The lender might consider those borrowers as “high-risk” ones. The lender will also judge your capacity of repaying the loan depending on factors such as job security and bank balance.
Receiving personal loan approval with a poor CIBIL score
Getting personal loans when you have a poor CIBIL score can be quite challenging but it is not impossible. How you can avail of the loan with a low credit score is listed in the following ways:
- Apply for a low loan amount – As you demand a personal loan carrying a high amount, the lender can consider you as a high-risk debtor. This is especially when you have a short CIBIL score.This is because, from the perspective of the lender, the prospect of you defaulting on repaying the loan is higher. But if the amount of your loan application is lower, the creditor will most probably grant a personal loan in a hassle-free manner. Repaying a low loan amount is much simpler.
- Resolve mistakes present in the credit report – It is very frustrating when you get loan rejections again and again because of a bad CIBIL score. If this happens, it is important to take a look at some points. There might be misreporting present on a credit report which is why lenders or banks go on rejecting your loan applications. So you need to check whether your current report is updated or not along with the latest information. Mistakes like this can lead to unwanted problems. Checking the CIBIL score regularly is very important.
- Displaying proof of income for supporting loan repayments – Suppose you have a poor credit rating but a boost in salary or any additional stream can help you in getting loan applications approved. Also, you must show the lender the proof of a secured job along with a stable income flow. But it is important to note that you might have to incur a higher interest rate.
- Get yourself a guarantor or apply for joint loans – In the present era, it is no longer a very challenging thing to avail of personal loans even with a poor CIBIL score. It is advisable to get yourself a guarantor who carries a healthy credit rating. This enhances the chances of faster loan approvals. Of course, it is highly important to first receive permission from the guarantor for using his/her name. Then you need to complete KYC formalities and also you need to get the necessary information on important forms. When your lender will witness a co-applicant carrying a proper CIBIL score on the loan application, it will always help you in receiving a better deal.
- Request the creditor to mark NH or NA in the credit report – When you have a credit period that is inactive for more than 36 months or there is a lack of credit period at a similar time, it will be marked by NH or NA on the credit report. This will indicate that you do not carry a credit score in the CIBIL report. Accordingly, you need to talk with the respective lender and also explain the reason for the inactive credit period. It increases the chances of getting loans approved but with a high rate of interest.
Eligibility for a loan with a poor CIBIL score
The CIBIL score is a highly crucial portion of personal loan worthiness. But there are several other factors that play a vital role in getting loans approved.
- Checking CIBIL score is possible via online mediums
- Always utilize a personal loan worthiness checker for evaluating the loan amount that you can actually avail. It will also show you the EMIs that you will be liable to pay.
The best way of getting a loan approved with a low credit score is to avail from NBFCs. The eligibility criteria of these institutions are flexible in comparison to banks. In case you have been a defaulter earlier in a particular loan and for authentic reasons, you must explain it to your lender.
Conclusion
Emergencies or monetary needs for any reason can crop up at any time. Simply follow the steps mentioned above to avail of personal loans easily even when the CIBIL score is not healthy. However, repaying loans right on time is always a sensible thing to do.
