Can You Get a Personal Loan with a Low CIBIL Score? Here’s What You Need to Know

Personal Loan with a low CIBIL score

Lending institutions sanction a loan after scrutinising the creditworthiness of the applicant. Since a high CIBIL or credit score denotes the high creditworthiness of a borrower, lenders can quickly accept a loan application with an excellent score. Moreover, they can consider offering low-interest rates on such applications. But what if an individual needs urgent funds but has a low CIBIL score? Is it still possible to get a Personal Loan to meet financial requirements? Getting a Personal Loan with a low CIBIL score can be challenging for many individuals with a low credit score as it is a red flag for lenders. But it is still possible to secure funds against a loan. Ways to Get a Personal Loan with a Low CIBIL Score Check if your CIBIL score is really low Apply for Personal Loans after checking the credit report. Sometimes, an individual's credit report may not be up to date. It may also record inaccurate figures. Generally, there can be clerical mistakes in their credit reports. These can include wrongly spelt names or addresses, or there can be an open loan account that has been closed earlier. A flawed credit report can show an individual unnecessarily riskier than they are. Such issues can reduce their CIBIL score. Therefore, borrowers are recommended to check their credit reports before making a loan application. If there are some errors, get them rectified by requesting the credit bureau. Consider a Co-applicant A loan seeker can take the help of a co-applicant and apply for a loan jointly or look for a cosigner who can take responsibility for your loan if they default. It provides a sense of security to the lender. Therefore, the lender can consider approving the loan application. Borrowers can consider a family member, relative or friend to make a joint loan application. However, ensure that the chosen person has a stable income and high creditworthiness. It will increase the odds of loan approval at a reduced interest rate. Hence, apply for a Personal Loan jointly if you are facing the issue of having a low credit score. Apply for a Lower Loan Amount When it is an application for a Personal Loan with a low credit score, most lenders are reluctant to accept it. This is because it is a risky profile for lenders. As a solution, borrowers can apply for a smaller amount comparatively. It will reduce the risk for the lenders and make them consider the application. Furthermore, evaluate your cash flow before applying for a loan and determine the amount you can repay without feeling financially burdened. Lenders provide a loan EMI calculator at their official website to help borrowers to determine loan EMIs (Equated Monthly Instalments) for the chosen loan amount and tenure. Utilise it to know the monthly instalment on a principal loan and understand if it is the right choice. Furnish Steady Income Proof Applicants with a low CIBIL score must prove that their income can support monthly EMIs towards the loan. There are other factors than CIBIL score that lenders analyse before loan approval. One of the eligibility factors is stable income. The loan applicant can also show an additional source of income, like rental income, interest income from investments, etc. It will increase the probability of Personal Loan approval. These are some of the easy and effective ways to get a loan with a low CIBIL score. However, it is vital to improve the CIBIL score. To improve your CIBIL score, make every EMI on time, limit your credit utilisation, keep the debt-to-income ratio lower than 30%, avoid making several loan applications simultaneously, etc. Conclusion CIBIL score helps lenders assess the borrower's financial behaviour, like how they treated their previous debts. Therefore, individuals must be financially disciplined to maintain a high credit score. Even one mistake reflected in your credit report can reduce your credit score. Though there are ways to get a Personal Loan with a low CIBIL score, it may end up with high loan costs in many cases. Thus, work on building your credit score and maintain it at an excellent level for affordable loans.

Ways to Get a Personal Loan with a Low CIBIL Score

Check if your CIBIL score is really low

Apply for Personal Loans after checking the credit report. Sometimes, an individual’s credit report may not be up to date. It may also record inaccurate figures. Generally, there can be clerical mistakes in their credit reports. These can include wrongly spelt names or addresses, or there can be an open loan account that has been closed earlier. A flawed credit report can show an individual unnecessarily riskier than they are. Such issues can reduce their CIBIL score.

Therefore, borrowers are recommended to check their credit reports before making a loan application. If there are some errors, get them rectified by requesting the credit bureau.

Consider a Co-applicant

A loan seeker can take the help of a co-applicant and apply for a loan jointly or look for a cosigner who can take responsibility for your loan if they default. It provides a sense of security to the lender. Therefore, the lender can consider approving the loan application.

Borrowers can consider a family member, relative or friend to make a joint loan application. However, ensure that the chosen person has a stable income and high creditworthiness. It will increase the odds of loan approval at a reduced interest rate. Hence, apply for Personal Loan jointly if you are facing the issue of having a low credit score.

Apply for a Lower Loan Amount

When it is an application for a Personal Loan with a low credit score, most lenders are reluctant to accept it. This is because it is a risky profile for lenders. As a solution, borrowers can apply for a smaller amount comparatively. It will reduce the risk for the lenders and make them consider the application.

Furthermore, evaluate your cash flow before applying for a loan and determine the amount you can repay without feeling financially burdened. Lenders provide a loan EMI calculator at their official website to help borrowers to determine loan EMIs (Equated Monthly Instalments) for the chosen loan amount and tenure. Utilise it to know the monthly instalment on a principal loan and understand if it is the right choice.

Furnish Steady Income Proof

Applicants with a low CIBIL score must prove that their income can support monthly EMIs towards the loan. There are other factors than CIBIL score that lenders analyse before loan approval. One of the eligibility factors is stable income. The loan applicant can also show an additional source of income, like rental income, interest income from investments, etc. It will increase the probability of Personal Loan approval.

These are some of the easy and effective ways to get a loan with a low CIBIL score. However, it is vital to improve the CIBIL score.

To improve your CIBIL score, make every EMI on time, limit your credit utilisation, keep the debt-to-income ratio lower than 30%, avoid making several loan applications simultaneously, etc.

Conclusion

CIBIL score helps lenders assess the borrower’s financial behaviour, like how they treated their previous debts. Therefore, individuals must be financially disciplined to maintain a high credit score. Even one mistake reflected in your credit report can reduce your credit score. Though there are ways to get a Personal Loan with a low CIBIL score, it may end up with high loan costs in many cases. Thus, work on building your credit score and maintain it at an excellent level for affordable loans.

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