Sometimes situations and sometimes, your investment strategies make you have loans. It's normal nowadays that people prefer a loan to build a house or purchase a piece of land. Loans are the best options where you don't have to pay the whole amount on the spot. When it comes to balancing your monthly budget or savings, then loans are a good option where you can save and have your things simultaneously. When you have loans, a word comes that is CIBIL. While evaluating a loan application, lenders look at the CIBIL score, which is an essential factor. But it's necessary to know well about CIBIL score and how it is calculated before having any loan. It all depends on one's loan payment behavior, which is the essential element of the score composition.
What is the CIBIL score?
CIBIL score is a 3 digit numeric summary of your credit history. Credit history is derived by using details from the accounts and inquiries sections of your CIBIL report. The payment status of your loan account and credit cards, as well as the outstanding amount's days past due, plays a significant role in your CIBIL score. The CIBIL score reflects your worthiness towards your repayment of the amount that you share. The range of the CIBIL score is 300 to 900. So, people who have a higher score get a better chance of getting a loan approved. Different loans have different criteria's and 79% of loans are sanctioned to consumers with a CIBIL score greater than 750. It's crucial to maintain the CIBIL score as this can also work in the future for having any other loan.
How to work to have a high CIBIL score?
Your past payments and credit history finalize your CIBIL score and affect your future credit access. All your activities at present build a stronger and healthier credit footprint. Here are a few tips that can help you to improve your score:
Unpleasant surprises never come knocking on your doors so, to achieve your planned financial goals or in any case of emergency, you may need access credit. So, it's essential to balance the budget and your dues payments and maintain the CIBIL score.
How do you get a loan when you have a low CIBIL score?
When you need funds in a pinch, personal loans can be of tremendous help. But as mentioned above, these types of loans are sanctioned when you have an excellent CIBIL score. Then the question arises of what to do to have a loan despite a low CIBIL score. Another question is that does a personal loan not available for the person with a low CIBIL score? Whenever you go for a personal loan, the first checkpoint your application has to go through is the CIBIL score.
Personal loan when you have a CIBIL score of 550:
As mentioned above that, the scores range from 300-900. Getting a personal loan with a score of 550 is quite challenging, but it's not like you can't apply for a personal loan. Here the point is that the rate of loan application rejection is higher than the good score. But many points are considered while lending the loan, like if you have a stable income source and working with a reputed firm that offers job security, then the lender might consider your loan application. Different lenders have different policies so, before applying for a personal loan, one should know all about that. If you have a CIBIL score of 550 and are trying to have a personal loan, then try to increase your score to 750 before applying with multiple lenders. The second thing you can do is ask any of your family members with a good CIBIL score and a stable income to be the primary applicant for you.
What measures can you take for getting a personal loan with a low CIBIL score?
Can I get a personal loan without a low CIBIL score?
It is not possible to have a personal loan without the CIBIL score. As we know that there are two types of loans, and a personal loan is considered in the unsecured form of loan, the lender feels it challenging to determine the risks associated with the loan with no credit score.
Eligibility criteria for bad credit loans:
Many lenders are available online if you have a low credit score and still want a personal loan.
These criteria can be different for different lenders so, always through all the criteria.
Your credit history, for example, delayed or missed EMI payments, can be responsible for the negative impact on your credit score. Credit utilization also plays a great role in calculating your credit score. It refers to the credit amount that has been used against your total credit limit. So, keep in mind not to exceed your credit limit. According to the experts, you can exceed 30% of your credit limit after that; it is restricted. The type of credit you depend on is also checked more when your CIBIL score is calculated. You are considered at risk when you go for more unsecured loans like personal or credit cards.
But on the other hand, secured loans like car loans and home loans are beneficial to enhance your rating; but if you have made repayments regularly and on time. Another key factor while calculating the credit score is the period taken to service your credit. If you want to boost your credit card rating, then go for long-term loans repaid on a longer schedule avoid short-term repaid loans. It's all up to you to enhance your credit score.