The primary criterion to secure a personal loan is to have a high CIBIL score. Since a personal loan is an unsecured loan, the lender is bound to establish a greater priority on your CIBIL score to ascertain if you are a suitable candidate for it.
It is difficult to arrange a personal loan with a low CIBIL score. Personal loan with bad CIBIL scores comes with a high rate of interest. Building your CIBIL score will include timely repayment of all your previous loans, including home loan, vehicle loan, etc.
Although it is challenging to obtain a personal loan with bad CIBIL, it is not entirely impossible. Listed below are some tips to secure a loan even with a minimum CIBIL score:
- Offer proof of income: In case of a low credit rating, it becomes your responsibility to verify to the lender that you are capable of repaying the loan EMI regularly. Proving a steady income will inform the lender that you are capable of paying your EMI instalments. For instance, you can reveal a hike in salary or an additional passive source of income.
- Correct mistakes in your credit report: Sometimes, your bad CIBIL score could be due to inaccuracy or discrepancy in your credit report. Check that your statement gets updated with all the latest developments in your loan repayments and other factors, which might improve your credit score.
- Apply with a co-applicant or guarantor: If your spouse or relatives have a good CIBIL score, you can ask them to become a co-applicant for your loan. Taking a joint loan will significantly improve your chances of getting the loan since the CIBIL score of both the applicants is taken into consideration. Apart from a co-applicant, you can even secure a guarantor amongst your friends and family with a higher CIBIL score.
- Request a lower loan amount: The idea here is to avail the lower amount of personal loan and repay it steadily to build upon your bad CIBIL score. It will help strengthen your situation for the future when you need a higher amount of loan. Since the lower amount will be at a lower risk for the lender, it is highly likely that you will be able to get it without much hassle.
- Request your lender to consider your case with a NA or NH in your credit report: NA or NH are the remarks in your credit report made when there has been an inactive or absent credit period in the past 36 months. Lenders interpret this as a complete absence of a valid credit score in your credit report. To overcome this, you can explain the inactivity or inadequacy to your lender, and they might offer you a loan with a slightly higher interest.
If you secure a personal loan with the tips mentioned above, make sure that you are able to replay it in time. That will save your CIBIL score from diving down further in the future.
