How to get loan with Low CIBIL Score? Check Here!

How to get loan with Low CIBIL Score – While it is true that a low credit rating indicates the poor creditworthiness of a borrower and makes it difficult to obtain a loan, there are some ways to get a loan even with a low credit rating.

Credit score plays an important role during the loan approval process. A high credit score not only guarantees quick disbursement of a loan but also helps you to get loans at a low-interest rate. While it is true that a low credit rating indicates the low creditworthiness of the borrower and makes it difficult to obtain a loan, there are some ways to get a loan even with a low credit rating.

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A credit/cibil score is, in fact, one of the first markers that lenders consider when granting you a loan, such as a personal loan or line of credit. A higher credit score means higher repayment capacity. In other words, your credit score is an indication of your creditworthiness. A valid CIBIL score is in the range of 300 to 900, and anything above 750 is considered excellent. The higher your score, the higher the chances of your personal loan application being approved.

However, what if you have a low/bad credit score and need to take a loan for an emergency? If you are new to credit and do not have an existing credit score, how can you get a loan? It will be challenging, but here are some small things that you can do to avail loans even with a low or no credit score:

1. Show records of lump-sum refund of existing invoices

Your CIBIL score depends on the timely repayment of your existing loans. “If you have defaulted on any loan/EMI earlier, your credit score will suffer. Before applying for a loan, make sure you have a record of timely payments on all your outstanding loans, such as your credit cards, EMI loans, and utility bills. This will help you achieve a higher credit score and improve your chances of getting approved.

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2. Current proof of income to support the ability to repay the loan.

Most lenders consider other factors, such as your current salary or sources of income, along with your credit score. If your credit rating is low, you can still provide a bank statement with evidence of an increase in your salary, annual bonus, or other additional sources of income. It shows that you are financially secure enough to repay the loan on time; This will help you get approved faster.

3. Apply for a Loan from NBFC

If your CIBIL score is low and you need credit urgently, it is best not to apply for a loan from a bank, as every loan application evaluation is backed by a check of your credit report, resulting in tough inquiries.

“Many tough inquiries can negatively impact your credit score and also, if your application is rejected (likely more in case of commercial banks), it can further reduce your CIBIL score. Hence, it is better to apply for loans from NBFCs, as they have more comfortable policies for customers with low credit ratings. However, an important point to note here is that the interest rate charged by NBFCs is higher than the interest rate offered by banks,”

4. Choose a Lower Personal Loan Amount

The lender may consider you a risky customer if you are borrowing a large amount with a low credit score. You can opt for a lower amount and pay it regularly for a higher credit score. This will give the lender confidence in your creditworthiness and will be able to request a loan for a larger amount. Also paying a small amount will be easier on your pocket.

5. Get a guarantor or apply for a joint loan

Even if your CIBIL score is low or you are new to credit, you can get a loan approved quickly with a co-applicant or guarantor. “As long as the guarantor has a good credit history and a high credit score, the lender will be more willing to help you with a better deal on the loan amount. Make sure you have the correct permits and complete the required KYC paperwork,”

6. Apply for Secured Loan

Another easy way is to request a guarantee to guarantee the repayment of the loan; This can be against collateral such as gold or personal property or other valuable assets.

“There are some banks and financial institutions that provide easy loans to holders with low credit ratings whenever you apply for a loan backed by a mortgage. Lenders usually accept assets like property, gold, fixed deposits, etc. As collateral for giving guaranteed loans even to applicants with low CIBIL scores.

7. Fix Mistakes in Your Credit Report

Many times, there are genuine cases where your credit report contains errors or incorrect reporting. Check your CIBIL score once every 6 months to make sure there are no such errors and that your credit report is up to date.