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How to Get Personal Loan for CIBIL Defaulters

2021-06-08
3 Min Read
Author - Megha Khanna
How to Get Personal Loan for CIBIL Defaulters
541 views

A Credit Score or CIBIL score is a three-digit number that ranges from 300-900 and acts as the statistical analysis of a customer’s credit history. While a credit score above 650 is usually considered a good one and makes it relatively easy to apply for a personal loan at any financial institute, including a bank and non-banking financial institution.

On the other hand, failure to repay previous loans may decrease your credit score. Such a poor credit score makes you a CIBIL defaulter, making it harder to apply for loans because there is no guarantee that the bank can trust you anymore with a lump sum of money pledged.

Personal loan is a unsecured loan and hence comes with an easier application and approval process. While it has minimum eligibility criteria, one of the important criteria to apply for the same is a good credit score.

You can’t apply for a personal loan if you are a CIBIL defaulter or have a low credit score.

However, there are still some ways through which you can avail of a personal loan. These are some of the ways cited by Analysts and financial experts by which you can apply for a personal loan being a defaulter:

Apply for a Secured Loan

If you ask the bank to give a guarantee or asset as collateral, it is possible to get a personal loan as it is no longer unsecured as per usual. If the money isn’t repaid in time, the bank will sell the collateral to make up for the money lent.

Apply with a Co-Applicant

Having a co-signer for one’s bank account would ensure the personal loan with a joint signature. If you apply for a personal loan with a co-applicant with a high credit score, it increases the chances of approval and reduces the risk of default.

Apply if you have sufficient Income to pay EMIs

The minimum monthly salary required to be eligible for a personal loan is ₹25,000. Despite the low credit score, you can get a personal loan if your current income is good enough. You have to provide the relevant documents to show that the current income source is sufficient to pay EMIs, as some banks consider job facility a pivotal factor.

Get Loan at Higher Interest Rate

Non-Banking Finance Institutions ensure the processing of personal loans when the credit score is low but at higher interest rates (25-35%). If you are in urgent need of funds, then you can consider this option for a personal loan.

Peer-to-Peer Lending

Peer-to-peer lending ensures direct transactions between the lender and the borrower and requires no action from the bank services as the middlemen. Here, the lender examines the borrower’s monetary conditions, prospects, and possible assets to ensure that the loan isn’t entirely unsecured.

If you are indeed a CIBIL defaulter, the first step to work on is to improve your credit score and pay off all existing debts to increase the credit score. Making payments on time will eventually take your name off the CIBIL defaulters’ list and make it much more lenient to apply for a personal loan. A few such ways are-

  • Always review your credit report 3-4 times a year to understand the impact of delay in payments and check if there is an error in the report. Otherwise, it would affect your financial habits and result in a poor credit score.
  • Based on your requirement, always make sure to use a lesser amount. It will improve your score. Because lower credit means lower EMI, and this will quickly improve your credit score.
  • You must avoid late payments no matter what. Make sure you pay your EMI or monthly instalments within due time.
  • Try to pay your dues fully. Usually, banks send the bill or credit statement showing the minimum amount a consumer can make transactions. But the remaining amount is considered extra, which has high chances of affecting your CIBIL score.

The last resort is to have clear communication with the bank or lending institute about the applicant being a CIBIL defaulter. The ways mentioned above are dependent on the bank policies and may vary from one bank to another.

About Author

Megha Khanna
Megha Khanna | Living, loving and laughing | She loves writing and reading in her free time. Working with MyLoanCare since 2019

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*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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