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Have a low CIBIL score? Here are 6 ways that you can still get a loan
Your credit score or CIBIL score is a numeric representation of your past and present credit behaviour.Banks, non-banking finance companies (NBFCs), and other lenders use this score to measure the risk you pose as a potential borrower.
While a high score of 750 or more assures financial institutions that you have dealt with credit responsibly in the past, a low score does just the opposite. This is the reason why those with a low CIBIL score either don’t get access to new credit or get it at a higher cost of borrowing. While it may not be possible to get a personal loan without CIBIL score, you can still get a collateral-free loan with a low score.
To put the scores into perspective, consider that as per data shared by TransUnion CIBIL Limited, the credit bureau that collects information on borrowers’ credit history and assigns CIBIL scores, 41% of borrowers have scores between 748 and 777 and 42% have scores between 300 and 747. While it is better to be in the first category, you can still access credit with a low score. However, the first thing to do is to check your score and take advantage of the free CIBIL report download option provided by CIBIL as well as other financial institutions. This will help you identify the problem and work towards improving your score. To get a loan while you work on improving your score, put these tactics to use.
Choose a lender associated with your employer
Often, your company may have ties with a lender through which all salaries are paid or other benefits, like credit cards, are offered to employees. Such lenders offer perks or special provisions to employees and you can check if you can qualify for a loan with them despite a low CIBIL score. Since the lending intuitions will also have a record of your salary and be able to judge the stability of your job, they may be more inclined to give you a loan.
Look beyond banks and other traditional lenders
Small finance companies, peer-to-peer lenders, and some non-banks may offer more lenient or relaxed eligibility criteria, which can help you get a loan despite a lower score. This may help you get approval on your loan application, but keep in mind that you may still be offered a lower loan amount and a higher interest rate to address the risk you pose as a low CIBIL scorer.
Apply with a co-applicant or a guarantor
A co-applicant or guarantor with a high credit score can help you get a loan even if you have a less than favourable CIBIL score. Both these options help to spread the repayment responsibility among more than one person and thus reduces the risk. You may look forward to better loan terms and quicker approval with either of these moves.
Demonstrate sufficient income for repayment
The primary concern with a low CIBIL score is the possibility of default, especially when it comes to personal loans that offer the lenders no security. So, the best way to get approval with a low score is to provide evidence that you have enough finances to repay the loan on time. Apart from your salary, you can provide proof of investments that will mature during the loan’s tenor, other sources of income such as rental property you own, as well as your savings account balance. All this can convince lenders to offer you a loan.
Keep your required loan amount low
Another way to ease repayment concerns of lenders is to opt for a loan amount that isn’t too substantial. Since a larger loan constitutes a bigger risk, just borrow the minimum amount you need to and check if you get approval.
Offer a security as collateral
As a last resort, you can also forego a traditional personal loan and opt for a secured variant like a gold loan or loan against a fixed deposit. Since you cannot get a personal loan without CIBIL score, this move can also help you build your score with a secured loan if you don’t have any experience with credit.
Last but not least, check for any errors when you get the free CIBIL report download in your hands. Sometimes, financial institutions may not update your loan or credit card payment with CIBIL, which remains pending and lowers your score. Correcting such errors can also help you improve your score apart from working on other measures such as reducing your credit utilisation ratio, paying off existing debt, not missing EMIs and more.
To hit two birds with one stone, get your CIBIL score and downloadyour free CIBIL report from Bajaj Finserv by filling in a few personal details online. This also helps you get the best loan offers personalised for you, so you can apply for credit with ease.
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