Personal Loan with Low Cibil ScoreThe personal loan being an unsecured loan does not demand any collateral or security against the loan. Instead, borrower’s CIBIL score is essential to check his/her creditworthiness and ability to repay the loan. The credit information Bureau (India) Ltd; mentioned CIBIL is one of the credit agencies authorized by the Reserve Bank of India to calculate the credit history of an individual. An effective CIBIL score falls in the range of 750-900, indicating most creditworthiness.
Financial institutions have set criteria for checking the applicant’s credit score for personal loan approval. An individual’s CIBIL score is checked before the approval of a personal loan. Higher the CIBIL score, faster the loan approval. Lower CIBIL score reduces the chances of personal loan approval.
A person with a low Cibil score will have low creditworthiness, and obviously, lenders won’t take any risk of faulty payments. If your personal loan gets rejected due to low CIBIL score, there are a few ways to improve them. It is not impossible to get a personal loan with low Cibil score.
What is a CIBIL score?
A CIBIL score reflects an individual’s creditworthiness. It is a three-digit unique number that is derived considering the credit history and details given in the credit report. The closer your credit score is to 900, the chances of loan approval are high.
How does a CIBIL Score work?
A CIBIL score works well on the basis of four factors – payment history, number of loan enquiries, credit utilisation and loan type availed. A CIBIL score can work negatively if you have been defaulting EMIs, frequently enquired about loans, rate of credit utilisation is high and a mix of secured/unsecured loans have increased financial burden.
What factors lower CIBIL score?
Some prominent factors affecting CIBIL score – increasing number of current liabilities, more than 30% of debt utilisation rate, multiple loan rejections and inconsistent repayment history can lower your CIBIL score big time.
How CIBIL scores affect eligibility for personal loans?
Lenders consider CIBIL score to probe the repayment ability of the borrower. If the CIBIL score is closer to 300, it reflects a low credit score and affects the loan eligibility criteria of holding an excellent credit score.
What happens when you have a low credit score?
A low credit score can be a barrier when it comes to loan approval. A low credit score can keep you deprived of getting the best interest rates on loans, higher loan amounts are not sanctioned and collateral is required for security. Borrowers with a low credit score are considered to be risky to give loan approvals.
How can you improve your CIBIL Score?A borrower’s low CIBIL score becomes a questionable point during instant loan approval. But there is no need to panic or worry. A low credit score can be improved with some changes in financial habits – timely repayment of dues, clear old debts, check your credit report at intervals to verify any errors, switch to auto-debit for EMIs to avoid any scope of delay and do not get personal loans jointly with a borrower.
Here are ways of stopping your score from dropping further and improving it over time.
Avoid unwanted loans:Lower credit score is typically accompanied by a reduction in net worth. Assets like your (investments, cash, home loans etc.) are your net worth. Reduce unwanted loans like consumer durable loans, extravagant vacation loan or other loans which can lower your credit score.
Reduce credit card purchases:Credit card usage is an important factor that affects your credit score. It is important to pay your credit card bills and loan EMIs every month on time. As per CIBIL analysis, a delayed payment can reduce your credit score by 100 points.
Pay overdue debts:Prolonged debts and outstanding bills, if any, should be cleared before the grace period ends. Missed payments repeatedly will decrease your credit score, which can create complications in loan sanction.
Monitor your Credit Report:A credit score may get affected if you don’t track the credit report readings at intervals. It is likely that there may be errors and misreporting on your credit reports, if not updated with current details.
How to Get a Personal Loan on Low CIBIL Score?
A low CIBIL score simply states that the chances of personal loan approval are almost NIL. In this case, the only option left with the borrower is to look for ways to improve the CIBIL score and gain lender’s trust in timely clearance of EMIs. This will not let you face repeated rejections while applying for a loan.
Even though your CIBIL score is zero, you can still get a personal loan. This depends on lender to lender. When you are applying for a personal loan without any CIBIL score, you need to take the lender in confidence. In such cases, you need to have job security or should either fall under a high-income group. How you maintain your financial transactions at the end of the month may also play an important in acquiring loan without a high credit score. If you have these things in place, then chances of personal loan getting sanction based on your background and job/business stability increases.
Note: If You are in the age group of 21 – 58 years and have a minimum monthly income of Rs.15,000 then you are eligible for a Personal Loan from SimplyCash. No physical documentation and meetings required, apply for a Personal loan today.
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