A personal loan can always be of enormous help for people who require instant funds. Nonetheless, availing of a personal loan is not as easy as it may seem. Moreover, individuals may have to undergo a myriad of evaluations that the lenders may perform before sanctioning the loan. There are several personal loan eligibility checkers that you can use to analyze your eligibility for a specific loan amount. One of the prime factors you need to keep track of is your CIBIL or credit score. The best chance to avail of a personal loan is to maintain a strong CIBIL score. But what exactly is a good credit score? And can you still avail of a personal loan with a poor credit score? Learn below everything you need to know about CIBIL score for personal loan.
Understanding CIBIL Score
In a nutshell, your CIBIL score displays a sort of proof of your creditworthiness. The better your CIBIL score, the more chances you can avail of a personal loan. Moreover, your loan application will get approved faster with a good credit score.
Your CIBIL score for a personal loan is entirely dependent on your ability to repay your existing debt on time. Therefore, regular and timely pay members on your various debts such as loans, EMIs, credit cards, and so on. This can help you maintain a relatively high and strong CIBIL score. On the contrary, defaulting on your loan repayment can result in a decrease in your score.
Tips to Get a Personal Loan with a Low CIBIL Score
While maintaining a good CIBIL score is extremely important, you can also avail of a personal loan with a low credit score, although this can be quite a challenge. Discover below 5 elements to keep in mind to increase your chances of availing long term personal loans even if you have a comparatively lower credit score.
Show Personal Documents such as Evidence of Income for Backing up Your Loan Repayments
Many people may tend to have a low credit score despite having additional sources of income or a comparatively good salary. In some cases, you may even have an increment in your paycheck. In such circumstances, show proof of your income to support the loan repayments. Furthermore, if you display evidence of having a secure job, including a steady flow of revenue, your possibility of getting a loan will only increase. However, you will be subject to a much higher interest rate in most cases.
Consider Opting for a Lower Personal Loan Amount
Lends generally tend to label individuals with a low credit score as high-risk. Your lender is bound to think that your possibility of defaulting on the loan repayment is high. Thus, if you opt for a lower personal loan amount, your lender may be more likely to give you the loan.
Get a Guarantor
Individuals can also consider getting either a co-applicant or a guarantor if their credit score is low. A guarantor with a strong rating can boost your chances of getting a personal loan. Moreover, you can avail the loan much faster. After your guarantor or co-applicant permits you eligible for the loan, it is essential to finish filling out all the KYC formalities.
Make Your Credit Report Error-Free
In many cases, you may often find it a challenge to get a personal loan because of possible errors and misreporting in your credit report. This primarily happens because your record may not have been updated with present details. Thus, you must look into this and keep your credit report updated.
Opt for a NA or NH Case
Last but not least, if your credit period has been inactive for about 36 months or so, your credit report will be labeled as NA or NH. This means that you have a nil CIBIL score in your report. In such cases, it is always a good idea to reach out to your lender, even though they might offer you a personal loan with a higher interest rate.
Getting a personal loan with a low CIBIL score isn’t impossible. Personal loans are considered unsecured forms of loans. Thus, lenders usually analyze several factors before sanctioning you a loan. It can be challenging for lenders. Moreover, most lenders do not want to risk being associated with borrowers with no CIBIL score. These were some ways you can avail of a personal loan with a low credit score. It is always a good idea to consider determining ways to improve your CIBIL score for a better chance at getting a personal loan.