Can I Get A Personal Loan With A Low CIBIL Score?
Very often people find themselves short of money, especially when faced with a medical emergency or a natural calamity or for that matter a job loss. At such difficult times, a personal loan without collateral can get them out of a sticky situation.
A personal loan is basically an uncollateralized loan that is given based on a person’s creditworthiness and one does not have to pledge any asset for such borrowings. The better their credit score and history, the better the interest rate and other terms the borrower can hope to get from a lender.The best thing about a personal loan is that these days the application process, especially if a borrower approaches a good lender, is online and hassle-free.
Moreover, once the application is approved and all the requisite documents have been submitted and verified, the money can be disbursed into the borrower’s account in a matter of hours.Since a personal loan doesn’t require a collateral, the CIBIL score becomes vital for the lender to assess the prospective borrower’s creditworthiness. The CIBIL score ranges from 300 to 900, and most good lenders ideally want borrowers with a CIBIL score of 730 or more.
A good CIBIL score tells a lender that the borrower has had a good credit history and has been paying back past loans and the interest in time and in full.Borrowers with lower CIBIL score, too, can avail personal loans. However, the rate of interest charged from them may be higher and they may also face greater scrutiny while their application is being processed.
A borrower with a low CIBIL score can get a personal loan by applying with a co-applicant or a guarantor who has a much better credit history and a substantially higher CIBIL score. If the co-applicant or guarantor has a steady income the lender will typically offer much better rates of interest and other loan terms.Another way of getting a personal loan when one has a low CIBIL score is by proving that one can cover for repayments by an increase in income. Lenders prefer borrowers with a steady income and a stable business or job, as it gives them comfort that the person can repay the loan without much hassle.
Moreover, asking for a lower amount as a personal loan and then making timely repayments will work better for a borrower with a less than ideal credit score. This will lower the risk for the lender.In addition, a borrower should try and have any mistakes corrected in their credit report. Often, the latest information is not updated in the credit report and the borrower gets unnecessarily penalised for no fault of theirs.
Conclusion
Even if a borrower has a low CIBIL score, they can still get a personal loan although at a higher rate of interest. Getting a guarantor or a co-applicant with a better credit score can help a borrower get the loan at more favourable terms.Moreover, the borrower should seek a lower amount as loan and even check the credit report for any mistakes or dated information.
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