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Need Personal Loan for a Bad or Low CIBIL score? Learn How

By Finserv MARKETS - Feb 5,2019
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Benefits of Personal Loan Prepayment

Since Personal Loans are unsecured loans, lenders rely heavily on your CIBIL score to determine your creditworthiness. Your CIBIL score summarizes your credit history i.e. the amount of credit you have taken, your repayment diligence, and other credit-related factors. Hence, your CIBIL score helps a lender or a financial institution evaluate the risk associated with granting you a personal loan. Although having a good CIBIL score for a Personal Loan is important, you can still satisfy your need for a personal loan with a bad CIBIL score. At times, unexpected financial contingencies can affect your CIBIL score for the worse. If you find yourself facing such a predicament, here are some measures that will help you get a Personal Loan for low CIBIL score.

What is CIBIL Score and why is it Important for Personal Loan?

CIBIL is a three-digit number that is calculated on the basis of the financial history of the applicant. The CIBIL Score ranges from 300 to 900. With a higher CIBIL score you have better chances of getting your loans approved. As per CIBIL’s own analysis, 79% of the loans approved are for those individuals who have a good score of 750 or more.

A high credit score is a reflection of clean credit history. An individual with such credit history is seen as someone who is financially responsible. Lenders are more likely to approve loans of such individuals as they are deemed creditworthy. Hence, it is important for anyone applying for a personal loan to have a good CIBIL score. This helps in making the loan process a lot easier with the quick disbursal of the loan amount.

What is the Minimum Cibil Score Required for Personal Loan?

The minimum CIBIL score required for a personal loan is considered to be between 720 and 750. An individual with this score is considered to be creditworthy and lenders will approve your personal loan application quickly. You will also be offered your chosen loan amount at a nominal rate of interest. The higher your CIBIL score, the better are your chances of getting your personal loan approved.

Personal Loan for Low CIBIL Score

  • Prove That Your Income Can Support EMI Payments
  • Apply for a Smaller Loan Amount
  • Apply with a Guarantor or Co-Applicants
  • Check Your CIBIL Score for Mistakes
  • Offer Collateral

Prove That Your Income Can Support EMI Payments

If you want to apply a Personal Loan for low cibil score, you will need to convince the bank that you are financially capable of making the EMI payments. For this purpose, you can declare additional sources of stable income like rent, salary, and commission etc. to convince the lender that you can afford to make the EMI payments. However, you may have to pay a higher rate of interest on your Personal Loan if you prove your eligibility in this manner.

Apply for A Smaller Loan Amount

A lender is more likely to refuse if you ask for a high loan amount with a poor CIBIL score. A high amount with a low credit score only indicates more risk for the financial institution. However, when you apply for a lower amount of a Personal Loan, the lender may feel more comfortable granting the loan as it will be easier to repay.

Apply with a Guarantor or Co-Applicants

If you have a low CIBIL score, you can apply for a Personal Loan by involving a co-applicant or guarantor. If a close friend or a family member is willing, you can ask them to become a co-applicant or guarantor for your Personal Loan. If your guarantor or co-applicant has a good credit score or a steady income, the bank will most likely grant you the loan.

Check Your CIBIL Score for Mistakes

At times, your low credit score can also be due to errors in the CIBIL report. Mistakes like the omission of the latest transactions or misrepresentation of certain information can take a toll on your credit score. If you haven’t checked your CIBIL report in a while, make sure to check it and correct mistakes in case you spot any errors. Rectifying the errors will boost your credit score and make you a better candidate for the loan.

Offer Collateral

As a last resort, you can also consider pledging assets such as property or jewellery as a guarantee to avail a Personal Loan. Doing so can improve your chances of getting a personal loan for bad credit.

These measures will help you avail a Personal Loan for low CIBIL score. However, ensure that you have sufficient funds for repayment before you apply for a Personal Loan. With Finserv MARKETS, applying for a Bajaj Finserv Personal Loan is easy, convenient, fast and completely hassle-free. What’s more? The entire process is online and with loan approvals within minutes. So, why wait? Apply for a personal loan with us today!

What are the Factors that reduce the CIBIL Score?

The following are the factors that lower your CIBIL Score

  • Credit History

You need to pay all your debts and payments on time for a good credit score. If you fail to make timely payments this will have a negative impact on your CIBIL Score.

  • Credit Utilization Limit

A high credit utilization gives an impression of your rising debt burden over time. On the other hand, low credit utilization indicates a lower credit burden and helps boost your CIBIL Score.

  • Multiple Loan Application

Applying for multiple loan applications at the same time means you’ll inquire a lot for the same, this will negatively impact your credit score as this may portray you as a credit hungry person.

  • Improper Credit Report

It is necessary to keep checking your credit report every six months to rectify errors if any. To avoid any faulty information to get reflected on your credit report and reduce your CIBIL score.

  • Exceeding Your Credit Limit

Frequent requests for a higher credit limit can have a negative impact on your credit score. It’s best to requests for higher limit only when you really need it.

At Finserv MARKETS you can apply for Bajaj Finserv personal loan. However, you will be charged with a high-interest rate while providing personal loans for a low CIBIL score. You can always work on improving your credit score by making timely repayments and clearing your outstanding dues.

Download our personal loan app to read about benefits of availing personal loan online and get to know its advantages over offline personal loan.

Can a Cibil Defaulter get a Loan?

It becomes very difficult for a CIBIL defaulter to get a home loan. Banks consider a CIBIL defaulter as high risk and are hesitant to offer a loan. When a CIBIL defaulter applies for a loan, the individual needs to keep in mind that you will need to pay fees and other charges that are associated with the loan. So, you need to improve your credit score before applying for a loan.

Read more about How to Increase Chances of Getting Personal Loan

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522