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Low CIBIL Score? How Do I Get A Loan


Low CIBIL Score? How Do I Get A Loan

  • By Saral Credit
  • January 15, 2022

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:

  • What gives a negative impact is not paying the dues on time. So, always pay your dues on time.
  • If you cannot pay the massive amount in dues, then keep your balance low. Pay a small amount in time and control tor utilization.
  • Always keep balance in your secured and unsecured loans. Too many unsecured loans can be viewed negatively.
  • People with joint accounts sometimes forget to keep in mind that you are equally liable for missed payments if your partner does not pay the dues on time. So this kind of negligence could affect your ability to access credit when you need it.
  • Keep monitoring your credit history throughout the year. To avoid unpleasant surprises, it's better to have a look at your CIBIL score. If you find any inappropriate discrepancy, you can log a dispute on the CIBIL website.

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?

  • Figure out errors in your credit report: Due to any reasons, there may be misreporting or errors on your credit report so, resolve all the errors in your credit report. This happens because your report hasn't been updated. This is not considered your fault, so immediately report to the concerned authority and resolve it soon. This will increase your credit score and make you eligible for a personal loan.
  • Go for a low personal loan amount: With the low CIBIL score, your lender finds you at high risk when you ask for a huge amount in the personal loan. But if the loan amount is low, then chances are more that the lender will be inclined to grant you the personal loan. Not only can you get it as compared to the higher amount, but it will be easy for you to repay the lower amount. As you are the defaulter in the lender's point of view, always make it easy for you and the lender to have a personal loan with a low CIBIL score.
  • Evidence of income: For making the lender more favorable to your loan application, you can show proof of your income. If you are going through a low CIBIL score but with a hike in salary and additional income sources, then proof of your salary can work. The lender considers your loan application if you show shreds of evidence like you have a secured job and a steady income. By these shreds of evidence, the chances of getting a loan, but note that you may be subjected to a higher interest rate. 
  • Getting a guarantor or a joint loan: Whenever you want the personal loan, but you know that your low CIBIL score doesn't allow this you to do, then get a co-applicant or guarantor. But the guarantor should be with a good CIBIL score. Your co-applicant or the guarantor permits to ensure that the KYC formalities are completed with the necessary signatures on the required forms. So, having a guarantor with a good CIBIL score can give you a better deal. 
  • Considering NA or NH in your credit report: NA or NH is the idle period in the last 36 months or absence of a credit period during the same period. In this case, you can speak to your lender and explain the period of credit inactivity. It can become possible that the lender lends you a personal loan with higher interest rates. 

FAQ

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.

  • Age should be between 21 and 57 years
  • Incomes must be credited directly to the applicant's bank account
  • Income must be up to 15000

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.