How To Get a personal loan, with low CIBIL score?

A low credit score given by Credit Information Bureau (India) Ltd (CIBIL) makes it very difficult for an individual to get personal loans. Your credit score in CIBIL database becomes low when you defaulted on a previous loan that you took.

Since credit score serves as one of the initial criteria considered when assessing applications for personal loans, those with low credit scores due to past defaults have a low probability of getting loan approval.

In this article, some tips have been given on how to get a personal loan in spite of having a low CIBIL credit score.

CIBIL Defaulter: Who Are They?

The phrase “CIBIL Defaulter” does not appear in anyone’s CIBIL report, nor is it a legal term. Borrowers with very low CIBIL scores (less than 650) are called CIBIL defaulters because they are highly likely to have regularly missed payments on their credit commitments in the past.

Tips To Get Personal Loan: For CIBIL Defaulters

• Apply For The Personal Loan With a Guarantor

  Even if you’ve got a low CIBIL score from prior defaults but are financially solid, a guarantor can help get your personal loan application accepted.

  Having a guarantor reduces the risk the lender is taking when lending you money since they know someone else will cover them if you default. Having a co-guarantor enhances the likelihood that your application will be accepted.

  However, your guarantor must have a very high CIBIL score. Additionally, keep in mind that your guarantor’s CIBIL score would suffer as well if you default on your end.

• Opt For a Low Amount

  Let’s say your CIBIL score is poor, and you apply for a large sum of personal loans. In that case, the financial institution will view you as a high-risk applicant.

  But when you apply for a low personal loan amount, your chances of approval increase significantly. Although the amount is low, you should look into the bright side as your EMIs will be considerably low.

• Agree To Pay High Rate of Interest

  You may already know that personal loans are unsecured loans without requiring any collateral against the lending money. That’s why having a low or poor credit score will make you a risky applicant for the lender.

  Despite this, the lender may agree to lend you money but at a high-interest rate. That’s because the higher the risk, the higher the interest rate a lender charges. Not interested in paying high interest but need funds anyway? Check the pointer below.

• High Current Income

  If you are currently having a high income, your ability to repay any debt that you take in future will be higher. Regardless of your CIBIL score, a higher income in the present increases your chances of getting a personal loan.

Conclusion

A high credit score must be maintained to get loans, both secured and unsecured, easily. Establishing a good credit record is crucial whether one has defaulted on personal loans for a short period or ten years.

This also holds true for other loans. Loan defaulters have several options for borrowing money and can concentrate on raising their credit scores in the interim period.