People choose to avail personal loans to meet variety of requirements such as education fees, hospitalization charges, business needs, and many more. Good credit score and strong financial history are the factors that determine the creditworthiness of the person and the sanctioning of the loan depends heavily on the credit record of the person. A good CIBIL score gives the sense of confidence, assurance and security to the lender in terms of repayment of the loan; hence borrower with good credit score is given the preference for the loan sanction. However, even people with an average or a low CIBIL score can also avail the benefit of a personal loan, if he or she can manage the finance & transactions in better terms
As stated above, the lenders always seek of assurance in terms of repayment of the loans. When you have a low CIBIL score, such assurance is not provided to the lender. In such a tricky situation, the person can provide assets, such as “Car” or “House” as collateral against the amount which is to be availed. Such collateral can improve the interest of the lenders to provide you loan and they approve your personal loan almost instantly.
You can, even use the Fixed Deposits, PF, insurances, or other securities as collateral to avail the benefits of the Personal loan. When you put such assets as collateral, the approval of the Personal loan gets almost ensured. Also, the money invested in such assets keep on reaping the benefits and you get the loan amount, too. The duration of the can be as long as the tenure of such assets that is for example, fixed deposit tenure. So, the person can plan the repayment schedule accordingly. Another way is to avail the loan by putting gold or silver as collateral. Such loans are provided on the lower interest rate than usual.
The person can improve the chances to get personal loan by improving the CIBIL score. By doing so, you can even get the higher amount of Personal loan with relatively lower rate of interests. If you have any pending installments or bills or any dues, you should immediately pay that off. The payments of them will contribute to increase the low CIBIL score. Another trick is to borrow small amount of money and pay it off in the short duration. You will not have to pay high interest fees for such small duration plus the repayment will increase your creditworthiness in no time. If you are looking forward to borrow a large amount of money, this strategy can be helpful to improve your low CIBIL score and thus, your chances to avail the Personal loan gets higher too.
If you have a low CIBIL score, then there are high chances that traditional banks may not provide you Personal loan. In such cases, you can avail the loan amount from other local agencies or lenders. However, there is a possibility that such lenders may charge high interest rates.
The NBFC’s are created in order to support the individuals to get the loans. These lenders are created on the basis of common goal or purpose. These lenders can be owned by people coming from similar geographical area or similar industry or even from the same interest. These lenders are providing the personal loan to people at relatively higher interest rates then the market. These lenders provide personal loan to individuals even if they hold low CIBIL score because of their sympathetic approach.
When you hold a low CIBIL score, the lenders will be skeptical to offer you Personal loan. At the same time, if you bring a co-signer, who has a good financial history and can co-sign a loan with you, then the lender can approve the Personal loan for you. The co-signer is a backup for the lender, as in case, if you are not able to repay the loan, then lender can ask for the payment from the co-signer. The co-signer should be a person, who knows you personally and has a will to co-sign a loan with you. In such case, the main borrower has to ensure the timely repayment of the loan so that the co-signer does not gets affected.
When you think of applying for a Personal loan, you credit information report (CIR) is among the first things that get considered for processing your application.
A low CIBIL score can deeply hamper your chances of getting your Personal loan approved, hence it becomes important to keep your CIBIL score and credit history positive so that your chances of taking financial assistance in the time of need won’t get sabotaged.
Thinking that improving your CIBIL score is a long and cumbersome task you may make you find the idea of reaching out to a credit repair company lucrative, but trust us, that is something you should be looking at as solution to improve your CIBIL score.
If you are planning to apply for a Personal loan or a credit card then you need to start working on improving your credit score soon. So, the first and foremost thing that you should concentrate on improving is your credit report. Any kind of disparity in the same can lead to rejection of Personal loan application, which further reduces your chances to get the loan or credit card. CIBIL score will not only indicate your credit score but will also have your payment history, which implies you need to discipline your spending and payment habits as well.
While being disciplined with payment schedules is one, there are other things that you can do bring significant improvements to your CIBIL score that include the following:
Keeping a check on your credit score and credit report can help in eliminating the chances of any false records or wrong information in your credit account. You can sign up with CIBIL to get monthly updated credit report or you can get your credit report from any other agency that provides credit report for an individual and an organization. Creating an account with any such website can be useful in maintaining a track of your credit report.
However, only getting the monthly credit report will not solve the purpose. You must check for things that are bringing your CIBIL score down. Sometimes it might have caused because of administrative issues or because of an unpaid EMI that you completely forgot about month after month. No matter what the reason is, such issues can bring down your CIBIL score significantly.
Whether you are paying EMI for loan or you have credit cards, paying the dues on monthly and timely basis can bring instant improvements to your credit report and history. Any kind of delay in such payments directly affects the credit report as the CIBIL score tends to change on daily basis in some cases and lower the score. The track record of your credit card and loan repayments can make up to one third of your CIBIL score, thus paying them on time will only help in building a good credit score.
Never ever think of delaying or skipping your EMI and card dues as it may cost your dearly later. Not only you should make the payments in timely manner, but should also ensure to do so at least 4-5 days before the due date to keep your CIBIL score in green zone.
Your credit card can be a prime factor in lowering your CIBIL scores as too much dependency on it can bring negative results. Thus, you must discipline your credit card usage and refrain from using the entire limit of your credit card. You must not spend more than 50% of your credit card limit and should stick to this until your credit score reaches 750+ status.
Once you spend the entire credit limit of your credit card it becomes clear that your spending habits are not disciplined and you do not possess enough finances to pay EMIs on time. Therefore, changing your credit card spending habits and improving your purchase behavior can significantly increase your CIBIL score.
To avoid such a situation it is advisable to make cash purchases wherever possible as doing so will limit you from going over your pocket.
Have been sending off too many inquiries for credit cards and loans? Stop doing so immediately as it shows your desperation for money thus bringing negative impact to low your CIBIL score. It is advisable not to apply for loans at different banks and NBFCs’ together as it will get revealed immediately in your credit report. Such kind of information in your credit report gives lender an indication that you are desperately looking for finances and may not be in a position to repay the same in timely manner.
As too many inquiries and applications show your desperation this may let lenders to take advantage of your situation and lure you into a high interest rate trap. Neither of the situations is good for your CIBIL score. As, in first case getting the money immediately will put you in a tight repayment spot which you may not be able to honor and the high interest rate will only toughen things further.
Thus, it is better to work on your financial situation wisely and not taking any sentimental decision which may make tackling finances difficult in the long run.
When you are already dealing with your low CIBIL score there is no point taking responsibility of someone else’s debt. If you become a guarantor for some then the onus of their repayment falls on your credit report as well. In case they default on the loan their action will also impact your credit score. Therefore, it is better to focus on improving your own CIBIL score first than being a guarantor for someone else.
No matter what the scenario is, it takes nearly 4 to 12 months for your CIBIL score reflect changes, thus there is no point in taking hasty decisions for score improvement. Instead you can begin disciplined expenses and payments that will gradually improve your credit score. You can also use online finance management tools to regulate your finances efficiently if you have a record of being reckless with your money in the past.
How to get personal loan with low cibil score and bad history?
Now in this piece of content, I will guide you regarding how you can get your loan application approved while having low/bad CIBIL scores. Below we have mentioned a few tips which may work as an alternative to help you get personal loan no matter if your CIBIL score is poor.
If you have got a good salary now:
Now if your earning is good enough now and that you have enough capacity to repay your loan then this will help you get your loan application approved no matter whatever your CIBIL score is.
Go through your spouse' CIBIL score:
If your CIBIL score is poor and your spouse has got a good CIBIL score, then you may ask for his/her assistance. You can get your loan application approved by making your spouse a join loan holder.
Seek certain HFCs that offer loans to individuals with low CIBIL scores:
There are certain companies and organizations which provide loans to the individuals having bad CIBIL scores. However, they ask for higher interest rates on the loan repayment.
Peer to Peer Lending:
Well this type of practice is popular in abroad. However, it is being implemented in India gradually. The interest rates on this loan are quite high and loan amount is small as well.
You can go for loan against collateral including shares, assets, FDs, gold loan and there are many other products available as well. Banks do not go through the process of CIBIL report for such products.
Will I get a personal loan if my CIBIL score is 680?
Ideally a cibil score above 750 is considered good for borrowing a personal loan.
To give you a small brief, your credit score is calculated primarily based on the following:
Past Performance: Individuals past performance on their debt obligations is the most important criterion and contributes approximately 30 per cent weightage to the score
Credit Type & Duration: Type of loan availed whether secured or unsecured loan, and the duration of credit history established contributes an additional 25 per cent to the score.
Credit Exposure: The total amount of credit exposure contributes another 25 per cent
How to get personal loan in India, if I am unemployed?
Its very difficult to get a loan in such a situation from any private bank or even most Public sector banks. However in Punjab National Bank, if you have a bank balance of Rs 5000/- and above for atleast 6 months continuous and you do regular transactions on it, they grant loans up to the value of around Rs 50,000/- ( Fifty Thousand ) , this may not be the case in all branches of PNB, but in the few branches I know in Bangalore, this is the case. So with your little savings, if you can manage to put up 5k in a PNB account,and transact small amounts above that, you might get it. But I feel this may not be very helpful to you at the moment as you have said that you need around 1 lakh and right now .
Please work really hard for govt exams, even when I wrote my first few exams (I too was an engineering graduate like you ) ,I was very confident that I will easily crack these exams, but it was not the case, and I had to work very hard later to crack a few. There ll be around 15 lakh to 20 lakh people applying for each govt clerk / bank clerk exam, so the competition is intense and crazy, please work hard and I wish you the best of luck !
In that regard, this is 1 option which might help you out partially, some of my friends, who were preparing for these govt exams,applied for a part time teacher post at these various bank exam preparation institutes. So they earned atleast some 4ooo-5000 per month while teaching the subjects which they were anyways preparing for. This might help you a lot,as it will sharpen your concepts when you teach others, and also partially take care of your financial needs.
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