How To Get A Personal Loan With Low CIBIL Score?

A credit score is a commonly accepted parameter among financial institutions to gauge the creditworthiness of a person, generally, a loan applicant. In India, TransUnion CIBIL is the credit bureau whose credit data is synonymous with a credit score. Hence the term ‘CIBIL score’. Factors like your payment history, your credit exposure, the credit you have availed, and the duration are considered while measuring your CIBIL score. Thus, it is apparent that your CIBIL score lowers if you default on your loan payments. However, minimal credit activity, too, can keep your CIBIL score unmoved. While a low CIBIL score upsets your prospects of getting a personal loan, you can compensate for the low score with some of the measures listed below.

1.Check with the Credit Bureau

To begin, understand how credit scores are assigned and ensure that your score justifies your credit records. Get in touch with the credit rating agency if you spot an error in your credit report. In fact, you can regularly monitor your credit report and highlight any inaccuracies to them. It is important to eliminate any possibility of a low credit score for which you are not to blame.

2.Prove your financial strength

To get a personal loan with a low CIBIL score, you should highlight your income. Highlight any hike in your salary, a high-value client you have roped in for professional services, or an alternate source of income that has opened up recently. Convince your lender that you have sufficient income flow to meet the EMIs and that a low CIBIL score is of little consequence in doing so.

3.Start small

Use your personal loan as a tool to improve your credit score. A low CIBIL score may mean that you will be offered higher personal loan interest rates. Nevertheless, if you initially opt for a small loan and repay it on time, your CIBIL score will gradually improve. A low CIBIL score is seen as a risk by lenders in the case of unsecured loans. However, a small personal loan might be within their risk appetite.

4.Outside support

If the personal loan interest rates offered are too high, you can also apply jointly with a co-applicant or rope in a guarantor. This should improve your loan approval prospects. Besides, a better interest rate may be offered, the financial benefit of which can be checked through a personal loan EMI calculator.

5.Press for non-applicability

We have mentioned that your credit score may be low simply because of a lack of credit-related activity. If you had no activity in the last 36 months that could alter the CIBIL score, you could request your lender to mark you as a case of No History (NH) or Credit History Not Available (NA) in their credit assessment. This can help your loan application get approved despite a low CIBIL score.

6.Try your salary account

If you are a salaried applicant, you will likely have a salary account with your employer’s chosen banker. They already have a record of your salary inflow and might be more open to offering you an unsecured loan. While seeking a personal loan with a low CIBIL score, the banker with your salary account can be the ideal choice.

If you already know that you have a low CIBIL score, you should increase your credit activity and avoid payment defaults to build up your credit score. And if you need an urgent personal loan, you can improve your chances of getting one with these simple steps. Once you get your first personal loan, use it as a stepping stone to lift your credit score in your favor.