This three-digit score ranging from 300 to 900 is allocated by the credit ranking agency known as TransUnion CIBIL. It shows your creditworthiness and repayment capability.
Personal loans can be very beneficial when you need funds to meet planned or unplanned expenses. These may include financing a wedding, medical expenses, your child’s education, home repairs and more. However, financial institutions look for financial stability from borrowers to sanction a loan. One of the parameters lenders checks before approving your application is your CIBIL score.
This is a three-digit score ranging from 300 to 900 allocated by the credit ranking agency known as TransUnion CIBIL. It shows your creditworthiness and repayment capability. The closer the score is to 900, the better are your chances to get approved for a personal loan. Generally, the CIBIL score required for a loan without collateral is considered to be above 750. For instance, the Bajaj Finserv Personal Loan requires a score of 750 for quick approval on applications by salaried professionals.
But what if you have a low CIBIL score? Getting a personal loan is still possible if you follow certain steps. Read on to find out how a low score is detrimental and the ways to get a personal loan for low CIBIL score applicants.
How does a low CIBIL score lower your chances of getting a personal loan?
Financial institutions will not sanction a loan to an individual who can’t repay it. A low CIBIL score puts you into the category of high-risk borrowers. A high amount of debt or non-repayment of previous debts or credit card bills significantly lowers your CIBIL score. Your credit score is reduced even if you apply for credit too many times or have a higher credit utilisation ratio. A lack of experience with a mix of secured and unsecured loans also causes your score to slump. For all these reasons, a low score leads to either a rejection of your loan application or may result in you paying a higher interest rate, which is not cost-effective.
Tips to apply for a personal loan for low CIBIL score borrowers
Even if you don’t qualify for the CIBIL score required for loan approval, lenders may still consider you for a personal loan in case of the following.
Apply with a co-applicant to get a low CIBIL personal loan
If you cannot meet the eligibility criteria for a personal loan due to a low score, apply with a co-applicant who has a good CIBIL score, preferably at least 750. In such a case, lenders consider the credit history and repayment capability of both the applicants combined. So, you have better chances of getting your personal loan approved with a co-applicant who has a high income and CIBIL score.
Consider a guarantor to reduce the lender’s risk
Lenders ask for a guarantor in case they need additional security while approving a loan application. A guarantor signs the agreement and assures the lender that he/she will repay the funds in case you fail to repay or default on the loan. So, you can opt for a loan with a guarantor who supports you and has good financial records to increase your chances of getting approved for a low CIBIL personal loan.
Show your repayment ability to the lender
With a low CIBIL score, you may get approved for a personal loan for salaried employees if you succeed in convincing the lender about your repayment capability. Disclose your salary proof, returns on investment earned, rental income, if any, or any income earned through freelancing. This way, you can display multiple sources of income that you can use to make timely repayment of your low CIBIL personal loan.
With these tips, you can borrow money online with a personal loan and even improve your credit score by repaying it diligently. However, rather than making it a habit to apply only for a personal loan for low CIBIL score applicants, work towards increasing your score by being more responsible with credit and managing your finances well. As you do this, you will be able to maintain the CIBIL score required for the loan approval to get access to quick and affordable financing in times of need.
Choosing the right lender can make a big difference. Consider Bajaj Finserv Personal Loan - it comes with an instant approval process and a quick disbursal within 24 hours of approval. With competitive interest rates and a flexible repayment period, you can get a loan of up to Rs.25 lakh from Bajaj Finserv. Check your pre-approved offer with just a click to see if you qualify for funds in under 20 minutes with no documents.
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