There are very few options left for people with low-paying personal loans or low credit scores to get money from structured and organized spaces.
In their time of need, low-income salaried people often struggle to get a personal loan. Those who are defaulting on CIBIL are equally affected. A financial emergency can happen at any time unless one is prepared to deal with the emergency fund. While some may be financially prepared, not all may be in the same position.
The most affected segments are particularly the low-income salaried and self-employed. Moreover, most of them have low credit scores and often depend on friends, relatives or colleagues to borrow money and some even have to borrow money from neighborhood lenders at exorbitant interest rates. If you are looking for a loan from a bank or NBFC, you must have a good credit score.
Getting a personal loan for CIBIL cases may not be an easy task, as they tend to have a low credit score. “Credit score or CIBIL or EXPERIAN score is a criterion used by all banks and shadow banks (NBFCs). Those who do not achieve a certain score are automatically rejected and hence are not even allowed to apply for the loan.
What are the options
However, there are several fintech companies that offer personal loans for CIBIL defaulters or people with low credit scores. Essentially, the fintech companies that offer bad credit loans online are not entirely dependent on the borrower’s credit score. “Unlike banks and NBFCs, credit bureau score is not a pass/fail score for us. This is undoubtedly an important but not definitive piece of information.
Low income loans
There are very few options left for people with low-paying personal loans or low credit scores to get money from structured and organized spaces. For these people, borrowing money from lenders does not help them build or build a credit profile. In such cases, repayment capabilities of loans taken from fintechs also help in building a credit profile. “Unfortunately, low-income people have very few lenders who are ready to give them loans. Most banks do not lend to anyone whose net salary is less than Rs 25,000 per month and NBFCs do not lend to anyone whose net salary is less than Rs 20,000 per month.
Fintech companies primarily use technology to grant loans or credit to borrowers based on parameters established by their internal norms. New-age technology-enabled lenders may soon change the lending model to those whose loan applications have been rejected by banks due to low credit ratings. “Banks have a very preconceived notion of lending. They believe that repayment capacity and intent can be assessed only through limited data points.
Hence, your credit practices are very straightforward. In contrast, fintechs tend to think outside the box by considering alternative data points that banks do not consider. We believe that the signals needed to evaluate a loan applicant come not from 1 or 2 data points, but from Must come from multiple data points. This allows fintech companies to get higher approval rates than banks or NBFCs.
Low-income people need to ensure that their repayment history is of great importance in the long run. Timely payment of principal and interest without default will help improve your credit score. With a higher credit score and increased income, getting an auto or home bank loan will become much easier.