How to Get a Personal Loan for Low CIBIL Score

Let us first understand what a personal loan is. In simple terms, a personal loan is a form of loan without any security or collateral. It has the minimum amount of documentation involved. It is not a secured form of a loan. Payments have to be made every month. It is generally taken in times of emergencies. It can also be used to buy or invest further. 

Getting a personal loan for low CIBIL score is tough but possible. In this article, we’ll understand how to get the benefits of a personal loan for low CIBIL score.

What Is Cibil Score And How Does It Work?

CIBIL stands for Credit Information Bureau India Limited. Your 3-digit CIBIL Index is a statistical representation of your personal credit record. The credit record contained in the CIBIL Profile is used to calculate the score. A CIR is a person’s cumulative extended credit activity over time spanning various loan kinds and credit unions.

Financial institutions will assess whether financing you is a risky prospect because personal loans are unprotected or without security, but a credit history will assist them in doing that.

The functioning of the CIBIL scoring is comparable to that of many other nations’ credit report schemes. A rating, or a figure, in the range of 300-900 is given to you. The data that the companies provide to CIBIL leads to the number that determines the score you receive. This data is a compilation of your bank card, line of credit, home equity loan, and auto debt payments.

Factors That Affect Your Low Cibil Score 

The CIBIL score fluctuates depending on how you manage your debts and credit cards because it is meant to be a reflection of your investment behaviour. These are a few of the elements that could lower the CIBIL score.

Small loans – Because personal loans are unprotected, taking out several of them could lower the credit rating.

Skipping loan payments – Failing to make a loan payment could be seen as bad financial handling, which could affect your credit score and make it harder for you to get loans down the road.

Reaching the limit too frequently – Reaching the credit limit too frequently indicates frequent debt and a lack of sound money management, both of which lower overall credit history.

Not making timely payments on bank cards – Much like the EMI on personal loans, not making timely payments on credit card bills can negatively impact credit card bills.

Not making a complete payment on bank cards- You could believe that spending just the minimal amount due or a little bit extra will get everything under control, but this is untrue.

Ways To Get A Personal Loan For Low Cibil Score

There are some measures you can take for a personal loan for low CIBIL score: 

Verify if the Credit Score Is Less

The credit bureaus report occasionally misses the most recent update. This may negatively impact the credit history. People need to frequently examine their credit records and fix any mistakes.

Make someone your applicant for a combined loan.

A person with a poor credit score may have more success obtaining credit if their co-applicant has a strong credit score.

Obtain a Co-signer

The guarantee is responsible for the loan’s repayment in the event of any mishap. Loaners, therefore, see getting a guarantee with a decent credit rating favourably.

Provide Income Verification

The likelihood of a loan being accepted can be raised by providing proof of a high-earning career, an extra income source or steady cash flows.

Request for a smaller bank loan

So when the loan balance is less, a lender can be more willing to approve it. Investors view larger loans as unsafe because of this.

Having an NA or NH in your credit history

A credit file’s NA, NH, or negative credit rating indicates an idle credit term of at least 36 months. After hearing them out, people can clarify their inaction to their borrowers, who could approve their justifications and extend loans at a greater interest rate.

Improving your credit records

Another best way to get a personal loan for low CIBIL score is by improving your credit records. There are different ways of doing it, such as: 

Refrain from taking out several loans at once

To avoid having your credit rating decline, it is wise to pay off the present loan before applying for another one. Taking out several loans at once suggests one may not have enough money to cover them all. To enhance your credit score, taking out and repaying a single loan at a time is preferable.

Reduce the amount of credit you use.

Avoid using your credit or debit card to the absolute maximum to raise your credit score. It is recommended to make the CUR moderate, ideally under 30%.

Pay all the debt 

It’s essential to establish a tendency to ensure that most payments are completed in regular instalments. Because over time, the power payment systems will impact overall credit rating.

Don’t try to lend more

Do not keep submitting mortgage or credit card applications to different institutions if you’ve already been turned down for one. Spend a bit of time improving your rating before reapplying.

Key Takeaway

Maintaining a proper range of CIBIL scores is essential to gain any loan. Try applying to take a personal loan for low CIBIL score. Assess your income, debt and credit well. A constant review of these reports will save you from extreme debt traps. 

Identify your weakness in terms of credit well. 

To help you with all these, Piramal Finance is always there. Complete guidance will be provided based on your needs. For any query, visit Piramal Finance.