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Personal Loan for Low CIBIL Score

Personal Loan for Bad CIBIL

Last Updated 30th Oct 2020

  • 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 as well.
  • 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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Why CIBIL Score is important for Personal Loan?

CIBIL score is basically a three-digit numeric score indicating an individual’s creditworthiness. The Credit Information Bureau India Limited generates individual CIBIL score based on loan repayment history, outstanding debts, variety of credit availed, etc. Hence, timely repayments of loans will fetch you a greater score and failure to repay in time will result in lower score.

This score prepared by the CIBIL is used by lenders. 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 CIBIL score range and what it means when you are availing 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 application 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 Get Personal Loan on Low CIBIL Score

It will undoubtedly be challenging to get a loan approved if you have 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.

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 hence, will increase the scope of low CIBIL loan approval.

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.

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 easily 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 to the employees. If your employer has any such tie-up, apply in that bank. 

Opt for secured loans: If your low CIBIL score is disrupting your personal 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.


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.

What is the minimum CIBIL score for a Personal loan?

CIBIL score measurements are generally between 300 to 900. The minimum CIBIL score that most loan borrowers require to avail a personal loan easily is 750. However, getting a personal loan with a CIBIL score below 750 is also possible.

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 can I increase my CIBIL score quickly?

You can increase your CIBIL score quickly in the following ways.

  • Pay your credit card debts and EMIs on time.
  • Keep your credit card utilization below 35% of the credit limits.
  • Do not apply for credit cards or loans frequently.

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.

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