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Personal Loan for Low CIBIL Score

Personal Loan for Bad CIBIL

Last Updated 29th Nov 2021

  • CIBIL or credit score is an important factor in the personal loan because there is no security or collateral involved in it.
  • Both banks and NBFCs grant a personal loan on low CIBIL score.
  • However, lower the score higher will be the rate of interest.
  • An additional income source, hike in salary, or bonus can contribute to increasing your chances of getting a loan in case of low CIBIL.
  • Applying for a lower amount can also do the trick to get your loan application accepted.
  • No matter whether your personal loan application gets accepted or rejected, you must work towards improving your CIBIL score.
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How to Get a Personal Loan on Low CIBIL Score

It will undoubtedly be challenging to get a loan approved if a person has a low CIBIL score. Moreover, a loan with a low CIBIL comes with a higher interest rate. Here are a few ways that can help you to avail a low CIBIL personal loan.

  • Opt for NBFC : Unlike banks, NBFCs or non-banking financial companies generally have more lenient policies for the applicants with a low CIBIL score. If you have a low score but are facing a financial emergency, applying at NBFCs will be the best way to go.
  • Provide evidence of income : Many loan borrowers take factors like your current salary and income source into account while verifying your loan request. You can provide bank statements showing salary hike, annual bonus and other income sources while applying for the loan. It will prove your credibility to repay the loan on time and increase the scope of low CIBIL loan approval.
  • Apply for a low amount : Instead of applying for a high amount, opt for a lower amount. It will be easier to repay the amount timely, which will add to your credit score. Once the previous loan is cleared, you can apply for another loan and proceed in the same way. This will make you a trustworthy borrower, and you can quickly get a more substantial amount in the future.
  • Apply through a guarantor : Having a guarantor with a high CIBIL score raises the possibility of getting the loan. Your loan will be approved faster, and you will get a better deal as well.
  • Apply for a joint loan : A joint loan can be the answer to a low CIBIL loan. If you have any family member or friend with a high CIBIL score, opt for a joint loan. It will significantly increase your chances of getting a loan even with a low credit score.
  • Opt for banks tied up with your employer : If a company or organization has tie-ups with banks, the respective banks will offer special deals. If your employer has any such tie-up, apply to that bank.
  • Opt for secured loans : If your low CIBIL score is disrupting your loan application, you can avail loan keeping collateral such as land, gold, fixed deposit and so on. These are secured loans, and hence, low CIBIL scores can be overlooked for them.
  • Improve your CIBIL score : The ways mentioned above can help you in availing loans, even with a low CIBIL score. However, there is no substitute for a higher CIBIL score as most banks reject applications of the loan with a low CIBIL score. Clear your debts in time and manage the credits skilfully. You can keep track of your credit score along with your credit report using the online CIBIL score calculator.

Why CIBIL Score is important for Personal Loan?

CIBIL score is a three-digit numeric score indicating an individual’s creditworthiness. The Credit Information Bureau India Limited generates individual CIBIL scores based on loan repayment history, outstanding debts, variety of credit availed, etc. Hence, timely repayments of loans will fetch you a more excellent score, and failure to repay in time will result in a lower score. If you need a personal loan with credit score then a person should make timely bill payments, maintain a credit utilisation ratio etc.

Lenders use this score prepared by the CIBIL. Banks or non-banking financial entities approve applications with higher CIBIL as it promises timely repayment of the loan. For a better understanding, below is a table of the CIBIL score range and what it means to avail of a loan.#

CIBIL Score Remarks Availing loan
Between 750 to 900 Excellent You have a high chance of availing the loan with a competitive interest rate.
Between 700 to 750 Fair to good You have good chances of getting unsecured and secured loans. However, you won’t be in a position to negotiate for lower rate.
Between 600 to 700 Poor to fair You have a good chance of getting secured loans; however, with high rate of interest.
Between 300 to 600 Poor You have a poor chance of availing both secured and unsecured loans.

What Factors Make your CIBIL or Credit Score Lower?

Getting a personal loan with low CIBIL score is not impossible. However, it is important to have a look at the factors causing a lower CIBIL or Credit Score.

  • Multiple unsecured loans: Taking too many unsecured loans can cause a decrease in your CIBIL score.
  • High utilization of credit limits: Every credit card comes with a credit limit which is decided based on your income level, and credit history. If your outstanding balance is over 30% of the credit limit, then it is considered as high credit utilization which negatively affects your credit score. However, a ratio well below 30% would reflect that you are managing your debts appropriately which will contribute positively in your CIBIL score.
  • Untimely payment: Any default in your payment history will take your CIBIL score down. The default includes not repaying your debts or EMIs on time or in full.
  • Multiple rejected loan applications: Getting rejected by multiple banks is not seen as a good sign for a loan borrower. Each time you apply for a loan, your respective bank asks for your credit information and each time your credit information is requested, your CIBIL score goes down. Besides multiple loan applications and rejection gives the impression that you are credit hungry, thus, not a right prospect of advancing loan.
  • Settlement of Debts: Making a settlement with the bank and closing outstanding credit by paying less amount than the actual dues can seem to be a convenient option. However, it will have a negative impact on your credit score.
  • Un-diverse credit mix: A single type of credit or account does not add much to your credit score. Having credit cards, loans and managing them skillfully over time, will increase your score.
  • Credit inquiries: Each time any inquiry on your credit information is made, your CIBIL score goes down.

How to improve CIBIL Score?

A person can increase your CIBIL score quickly in the following ways.

  • Payment of bills on time : Timely payment of bills is one of the most critical factors determining the credit score. Individuals must make sure that they pay all their dues, including the loans, credit cards and phone bills, on time.
  • Aim for low Credit Utilization Ratio : A credit Utilization ratio below 30% is considered the ideal utilization ratio. Individuals must always check the credit taken by them and ensure that the credit utilization is not breaching the limit of 30%.
  • Limit your hard inquiries : Hard inquiries refer to those enquiries which occur when individuals apply for a new credit card or a loan. Many of them in a short period can damage your credit score.
  • Do not Close Unused Credit Cards : One must not close their credit cards because closing an account may increase the utilization ratio. Owing to the same amount but having fewer open accounts will negatively impact the score. Further, the credit age portion of credit score checks at how long a user had credit accounts. The older the average credit age, the better it is.
  • Dispute inaccuracies on Credit Reports : One should check their credit reports. Incorrect information on the credit reports may drag your scores down. Verify that the accounts listed in your words are correct. If you see errors, dispute the information and get it corrected right away. Monitoring your credit regularly can help you spot inaccuracies before they can do damage.

FAQs

How can I get a personal loan from low CIBIL?

You can get a personal loan from low CIBIL in the following ways.

  • Present bank statements supporting salary raise, bonus and additional incomes.
  • Apply for a lower amount instead of a huge one.
  • Apply along with a guarantor or apply for a joint loan.
  • Apply at an NBFC as they have more relaxed policies for loans with low CIBIL scores than banks.
  • Go for the secured loans.
  • Try to improve your CIBIL score.

Can I get a personal loan for cibil score of 550?

Most of the leading banks and NBFCs approve personal loans if a credit score is above 750. However, you can improve the credit score by paying bills on time, maintaining a credit utilization ratio, limiting hard enquiries etc.

What is the minimum CIBIL score for a Personal loan?

IBIL score measurements are generally between 300 to 900. The minimum CIBIL score that most loan borrowers are required to have to avail a personal loan easily is 750. However, getting a personal loan with a CIBIL score below 750 is also possible. This however, lands to higher personal loan interest rates.

Can I get an NBFC Personal Loan for bad credit?

Getting an instant loan without a CIBIL score is difficult as banks check credit scores while approving a loan. However, if you have a stable income source, you may get an instant loan with a low CIBIL score.

Which bank or App provide a loan with low CIBIL in India?

Many banks and non-banking financial companies in India provide the loan with a low CIBIL score. You can check your loan eligibility and apply with MyLoanCare to get the best deal.

How is the CIBIL score calculated?

Credit Information Bureau India Limited calculates the CIBIL score using their unique proprietary algorithm based on credit and loan repayment history of individuals.

Can I get a loan on a low CIBIL Score with a co-applicant?

Yes, you can get a loan with a co-applicant if you have a low CIBIL score. If you add a co-applicant who has a better credit score you get a loan at a low-interest rate and higher loan amount.

How can a borrower avail of the loan on a low CIBIL Score while it is the most critical factor?

The CIBIL score is indeed the critical factor that banks check while sanctioning a loan. However, if you have a low CIBIL score, you must apply through a guarantor with a high CIBIL score that raises the possibility of getting the loan or applying for a joint loan.


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Our News - Nov 2021
  • 2021-07-12 : Half of India working population credit active: CIBIL report
    Half of the working population of 400 million people in the country is credit active, having at least one loan or credit card. Credit institutions are fast approaching a saturation level in new customers as over half of the borrowers are from the existing customer base of a bank, the report by Transunion CIBIL said. India’s overall working population was estimated to be at 400.7 million as of January 2021, while the retail credit market has 200 million unique individuals who are credit active.
  • 2021-06-23 : TU Cibil to provide lenders score of first-time borrowers
    TransUnion Cibil will now be able to help a lender assess the eligibility of new-to-credit or first-time borrowers — who have never taken a loan or credit card from banks or financial institutions. The new service incorporates an algorithm that uses an adaptive machine learning framework for continuously monitoring behavioural trends of similar data subjects and preparing the required credit reports. According to Cibil, this will enable first-time borrowers to get credit.
  • 2021-01-07 : 66.66% of borrowers unaware of their CIBIL score
    A report stated that two out of three borrowers in India are unaware of their CIBIL score. CIBIL Score is the indicator of creditworthiness, CIBIL score helps in gauging the creditworthiness of borrowers.
  • 2019-07-08 : Bank of Baroda and CRISIL signs MoU to assess the credit quality of SMEs
    To assess the credit quality customers in the small and medium enterprises (SME) segment, Bank of Baroda and CRISIL have signed a memorandum of understanding (MoU). CRISIL will assess the SMEs by analyzing the data streams through its digital platform its proprietary platform for data and analytics. This facility will be available for both existing and prospective customers from the SME segment, the lender said.
  • 2019-05-27 : Allahabad Bank offers a concession on home loan interest rate to those having a good credit score
    Private sector lender, Allahabad Bank is offering a concession of 10 basis points to its home loan borrowers. The discount is available to only those borrowers who are having a credit score of above 750 from CIBIL and CRIF Highmark. Currently, the lender is offering 8.85% on home loans up to Rs. 25 lakh and 9.10% above Rs. 3 crores.
*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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