There’s a high chance of announced expenses occurring at some point in our lifespan. These expenses do not necessarily relate to an emergency for which we need funds. They can be as simple as vacation, higher education, or wedding expenses. However, to be eligible for a personal loan, one must fulfil the criteria for getting a loan.
One of the criteria that lenders will consider is a CIBIL score. It generally reflects your creditworthiness by analysing your credit history and credit report. It’s a scale that ranges from 300-900. If you have a low credit score, it hampers the chances of receiving a loan.
A high score makes the lender confident about you as a potential borrower. There is a high chance of people saying you cannot get a loan with a low CIBIL Score. But that’s not entirely true. You can get an instant personal loan with a low CIBIL score if you follow these few easy steps.
A credit score is an examination of your credit history to calculate your creditworthiness as a borrower. It holds the truth against you, making it easy for you to get a loan with a high credit score and convenient for the lender to lend you the loan amount.
The credit score ranges from 300 to 900, with 300 being the lowest and 900 being the highest score. Below are the factors that are generally considered when evaluating and determining one’s credit score:
| Factors | Weightage |
|---|---|
| Payment history | 35% |
| Credit utilisation | 30% |
| Length of credit history | 15% |
| Type and number of credit accounts | 20% |
Keep yourself in the lender's shoes and ask yourself: Will the borrower be able to repay a higher loan amount with a low CIBIL score? You, as a lender, will hesitate to give a loan to an uncertain profile. Rather than pushing for a higher loan amount, as a borrower, try for a lower personal loan amount that is safe and not filled with high risk for both parties, especially the lender, if the borrower defaults to repay the loan.
Provide evidence of your income through salary slips or documents that can back you up with proof of income that guarantees the lender your steady flow of income. There can be chances of having a low credit score, but you can be a decent profile with a steady income, or hikes in salary, or possibly someone with multiple sources of income. All these factors can assure your candidature to the potential lender and can work in your favour.
A co-applicant or a guarantor with a high credit score can escalate your chances of getting your personal loan approved by a low CIBIL Score. The lender will see your profile as a capable one for the repayment of the loan since they will look at you with support from your co-applicant or the guarantor.
Speak with your co-applicant or the guarantor in advance about your circumstances. They will need to complete all of the KYC paperwork associated with the application and provide their signatures.
Lenders and credit approvals scan the past 3-6 months of monthly bank balance to check whether you have a steady and reasonable income left by the end of the month. Depending on the income generated throughout the month, this shows your creditworthiness.
For example, you earn ₹50,000/- every month, and you are left with a minimum of ₹10,000 - ₹15,000 in your bank account by the end of the month. It reflects your stability, and the lender can consider you for giving a loan. But, for example, if you are only left with ₹1,000 - ₹5,000, it negatively affects your chances of obtaining a loan amount since there is an insufficient amount, which can make the lenders not trust you.
Taking a loan against your shares, gold loan, etc, can help you obtain a personal loan, even with a low credit score, as it does not really matter down the line. The lender will be able to consider you as a profile since you have a guarantee of something nearly equivalent to the personal loan amount in case of default on repayment of the loan amount. Also, regularly repaying the loan amount will help improve your credit score.
On the similar lines of co-applicant or guarantor and collateral loan, there is a third option called a secured personal loan, which you can apply for. Out of many secured loan types available, people often choose Loans Against Property (LAP) as a way to secure a personal loan if they have property as collateral or security.
Until all the loan amounts are repaid on time, the lender has the legal right to keep the documents to them. If there is a default in paying off the loan, the lender can hold onto your property and even put it off for an auction to recover the due amount. It is important to weigh all the pros and cons before taking out a secured personal loan to redeem a personal loan amount against it.
When nothing works on your side, and you cannot receive a loan from big sharks like banks or formally established lenders and financial institutions, you can pitch your loan amount to NBFC. A non-banking financial company (NBFC) is set up to make credit accessible to all easily. However, one needs to keep in mind that there are chances of higher interest rates that one will need to bear while opting for NBFC, along with repaying the said amount in a shorter span of time.
On Quid, we connect you with the most trusted NBFCs and lenders through our personal loan matchmaker . Considering your desired interest rate and other important factors, we lock you in with multiple lenders who make the right fit for your personal loan needs.
Ever heard the saying, when in trouble, the first one to rescue you is your neighbour? In this case, assume your rescuer is your bank, where you have set a lasting relationship with your debit and credit records for several years. Have a word with the concerned relationship manager or even the branch manager.
Based on your past debit and credit records and the unwavering history of your account with the bank for several years, you can stand a chance to get a personal loan amount.
Request your lender to consider your case for an NA (Not Applicable) or NH (No History) in your credit report. This sets you up and marks you for any inactivity with your credit card in the past 36 months. In such a case, you will not have a credit report, and a credit inactivity of several months will be visible. However, with a higher interest rate, you will still be considered and offered a loan.
It is not rocket science to crack this hard nutshell. From now on, remembering the do’s and don’ts that can help you maintain and improve your credit score will help you gain your ticket to your desired personal loan smoothly.
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