Does Having A Low CIBIL Score Make It Difficult To Get A Personal loan?
Cibil score is considered an important factor to get a personal loan. Read to know does low cibil score make it difficult to get a personal loan.
One of the foremost concerns of a lender is whether the borrower can repay the loan on time or not. A defaulting borrower means a loss for the lender. Checking the borrower’s credit history becomes essential in the lending process. A low CIBIL or credit score, especially while availing of an unsecured loan, can make the entire approval process challenging.This article explains whether you can get a personal loan with a low CIBIL score.
What Is A CIBIL Score?The three-digit score that reflects your credit history is the CIBIL score. It ranges between 300 to 900. The higher the CIBIL score, the better your chances of obtaining a favourable loan.
What Is A Personal Loan?A personal loan is an unsecured loan that a borrower can avail to fulfil their immediate financial obligations. You can use the loan amount to fund unexpected expenses like a medical emergency, vehicle or domestic repairs, and more. There are no restrictions on the usage of the amount.
How To Avail Of A Personal Loan With A Low CIBIL Score?Getting a personal loan with a low CIBIL score is challenging, yet not impossible. A few ways to avail of a personal loan with a poor credit score include
1. Support Your Income SourcesThe lender is primarily concerned about your repayment capabilities. If you can show them a salary hike soon or additional income from other sources that will allow you to repay the loan on time and completely, it can enhance your approval chances.
2. Apply For A Low Ticket SizeWith a low CIBIL score, lenders see you as a high-risk candidate. A poor CIBIL score makes you more liable to default than a borrower with a high score. In such a scenario, asking for a big amount for a personal loan may not work in your favour.
Your chances of getting loan approval with a lower amount are higher. Thus, applying for a lower amount can increase your chances of loan approval.
3. Get A Guarantor Or Apply For A Joint LoanA joint applicant with a good credit score can give you an edge, as the co-applicants CIBIL score can compensate for your poor CIBIL score. If you apply with a co-applicant or guarantor, they are responsible for repaying the loan in case of default. It offsets the lender's risk and reduces hesitation in approving loan applications.
Please note: This is only beneficial if the co-applicant or guarantor has a good CIBIL score and meets other eligibility requirements.
4. Update Your Credit ReportCheck for any misreporting in your credit report affecting your credit score. Such a situation may arise if the credit institution does not update your record with the latest information on your credit history.
Frequently Asked Questions
Q.1: How can I improve my CIBIL score?
Ans: A few ways to improve and maintain your CIBIL score are:
• Timely repayment
• A healthy credit mix
• Limit credit utilisation
• Keep the application frequency low
Q.2: What are the other fees involved in a personal loan?
Ans: A processing fee of 2-3% of your loan amount is chargeable. Additionally, lenders may levy foreclosure charges if you repay the loan before the tenure.
Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.