Credit score, or CIBIL score, has become a quite popular term recently. However, a major population is still unaware about credit scores or the fact that they have one. One day, while applying for a loan, the bank suddenly tells them their credit score is low and that their loan application has been rejected because of that. Also Read – Want to Buy House Within Rs 45 lakh? You Can Get Rs 1.5 Lakh Tax Exemption on Home Loans
So what is CIBIL or credit score? Also Read – Paytm Offers Loans up to Rs 2 Lakh Within 2 Minutes With Its Instant Loans Service | Details Here
CIBIL score is a three-digit numeric score that indicates creditworthiness of a person. The Credit Information Bureau India Limited (CIBIL) generates individual 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. Also Read – Odisha Man Learns Robbery Techniques From YouTube, Loots 2 Banks to Repay His Loans
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.
What happens when you have a low credit score?
When you have a low score, it means that you are a risky customer and banks are often not willing to lend you money. A credit score is primarily based on how well you have repaid your previous loans, whether you have defaulted or pre-closed any loan, what types of loans you have taken and how much of your income goes in repaying loans.
So, if you have a low score and still need a personal loan, you can find some lenders who will be willing to give you the money, but they usually charge a high rate of interest. Some lenders even charge up to 30-40% p.a., which is very high.
How to get a loan with a low CIBIL score?
It’s definitely a challenge 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 tips that can help you 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.
Go for NBFCs: 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.
Choose 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.
Go 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. But 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 skillfully. You can also keep track of your credit score along with your credit report using the online CIBIL score calculator.
