Personal Loan with a Low CIBIL Score

A personal loan is an unsecured loan that can be used in an emergency situation. The lender considers the borrower’s CIBIL Score before authorising a personal loan. Personal loans with a low CIBIL score are less likely to be accepted. Banks consider such candidates hazardous and often do not approve their loan applications. There is a larger possibility that the borrower has failed on any of his past loans. As a result, banks see lending to applicants with poor credit scores as dangerous. Similarly, if you seek for a personal loan and have a strong CIBIL score, banks would consider you trustworthy and will lend to you. Even if you have a bad credit score, you can still get a personal loan. However, in order to acquire a comprehensive picture, you need first thoroughly comprehend CIBIL Score and its link with personal loans.

Importance of your CIBIL Score

The credit score is generated by CIBIL (Credit Information Bureau, India Limited), which is the first criteria used to establish a borrower’s eligibility for a personal loan. A credit score is a three-digit numerical representation of an individual’s whole credit history. This information is provided by financial institutions on a monthly basis. Its value ranges from 300 to 900. A CIBIL score of less than 700 is regarded as poor. Banks frequently avoid personal loans that satisfy these requirements. Regardless of the fact that they have a high interest rate. Financial institutions will first check your CIBIL score. The CIBIL score is used to assess your creditworthiness. 

Furthermore, your credit record is a crucial aspect in determining your creditworthiness. Your credit report includes all prior information on all of your current and previous credit applications. Your report also tells the lender if you have ever failed on any of your past loans. Because it is based on loan and credit card debt repayment history. As a result, a high credit score shows that all EMIs are paid on time. Late payments and EMIs will lower your credit score. A creditor may acquire a personal loan in the event of an emergency. So, before granting a personal loan, the bank does extensive research to assess whether or not the applicant is creditworthy. Because no security has been deposited by the lender. They must use the CIBIL score to verify the applicant’s credit repayment history.

Ways of Obtaining Personal Loan with Low CIBIL Score

Your prospects of obtaining a personal loan are diminished if you have a poor credit score. There are, however, ways for a lender to provide you with a personal loan. Some options include the following:

Collateralized Loan

Borrowers can get secured loans. Furthermore, collateral loans such as gold loans, loans against land, fixed deposits, and so on may help you get a secured loan even if your credit score is low.

The firm’s and the lender’s relationship

If a borrower works for a respectable firm, the lender may be able to secure the loan through the business relationship. Furthermore, the lender provides extra terms. Finally, it makes loan acquisition easier.

Loan Paired with a Family Member

If any family member has a high CIBIL score. Borrowers may apply for a combined loan based on both of their CIBIL scores.

Guarantor with a Good Credit History

If a borrower can locate a guarantor with a good CIBIL score among his or her family, the borrower has a greater chance of securing a personal loan based on the guarantor’s credit score.

Take out a loan from an NBFC

Non-banking financing companies (NBFCs) are more anxious to lend you money than banks, but the interest rate may be outrageous.

These are some of the methods for obtaining a personal loan even if you have a poor credit score. However, having several loan rejections on your credit history will reduce your score even further. As a result, it is recommended that you first follow the steps on how to improve CIBIL score before applying for a personal loan.


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