What is a CIBIL score, and how to get a Personal Loan with a low CIBIL score?

If you are applying for a personal loan, you must know ‘what is CIBIL score?’ When you apply for a personal loan with a low CIBIL score, one of the most crucial factors that a bank or lender would consider is your CIBIL score. Your CIBIL score can range anywhere between 300 and 900. 

Significance of CIBIL score and credit history

A CIBIL score is a three-digit number based on the borrower’s credit history record. It includes information gathered from various sources, including credit card providers, banks etc. It is the output of a mathematical algorithm that uses the information on your credit history to predict how credit-worthy you are. A CIBIL score takes time to build, and obtaining an acceptable credit score normally takes 18 to 36 months.

Guide to getting a personal loan with a low CIBIL score

It may be difficult to get a personal loan with low CIBIL score, but it is still possible to get a personal loan with a poor CIBIL score if you follow the steps below:

  • Show proof of income to back up your loan repayments

If you have a low CIBIL score, your salary has recently increased, or you have another source of income, the lender may be more receptive to your loan application. Furthermore, if you can prove that you have a secure job that gives you a steady income, the chances of your loan getting approved also go up. It is important to note that lenders usually charge a higher interest rate due to the increased risk factor owing to a low CIBIL score.

  • Consider applying for a small personal loan

If you ask for a high-value personal loan with low CIBIL score, the lender may perceive you as a high-risk candidate. From the lender’s point of view, you are more likely to default on the loan repayment. In cases where the personal loan amount is smaller, the lender may be more inclined to grant the request. 

  • Consider a joint loan

When you have a low CIBIL score, getting a guarantor or co-applicant with a good CIBIL score may help you get a personal loan faster. As part of the KYC process, make sure that the forms are filled out for your co-applicant or guarantor and their signatures on the relevant forms, with their permission. When the lender sees a co-applicant or guarantor with a good score on the CIBIL report, it can help you get a competitive interest rate.

  • Resolve credit report inaccuracies

Having a low CIBIL score may make it difficult for you to qualify for a personal loan. However, you should be aware that there may be possible errors or misreporting on your credit report. Usually, this happens because the records may not always have the latest information. free CIBIL score check regularly to stay ahead of the issue. If you find any errors, make sure that you report them to the relevant authorities as soon as possible. It will also raise your credit score, making you a more desirable candidate for a personal loan.

Is it possible to get a personal loan without a CIBIL score?

It is impossible to get a personal loan without a CIBIL score. Since personal loans are unsecured, it is often difficult for a lender to determine the risks of lending to someone who does not have a good credit history. You can either begin building your credit history from scratch, which can take a long time to complete, or consider the following options below. 

  • Collateral-based loan

It is a type of loan where your assets can be pledged as collateral, such as real estate, shares, gold, and other valuables. This will also enable you to start your credit journey and create a credit report.

  • Peer-to-peer lending

P2P lending is a good option if you need a small amount, but it usually comes with a high interest rate.

  • Get a credit card

You can apply for a credit card from your bank if you are a salaried person and have a bank account. On the other hand, if you are not eligible for one, you may be able to get an overdraft facility by using your fixed deposit as collateral.

If you do not qualify for a credit card, you can apply jointly with a family member who qualifies for a credit card. By paying credit card dues on time and using credit cards responsibly, you will be building up a good credit score. So, before applying for a loan, it is essential to know ‘What is CIBIL score’ and get a personal loan with low CIBIL score or a low CIBIL score range.

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Isabella Martinez

Isabella Martinez is a creative and driven individual who was born and raised in the vibrant city of Los Angeles, California. From a young age, Isabella demonstrated an interest in the arts and developed a passion for storytelling through various mediums, including writing, photography, and film.

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