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Can I get a loan with very low CIBIL score in India?

A healthy credit score is for sure a prerequisite to be approved for loans. Post the recent economic crash, credit institutions have tightened their credit policies. Any bank or NBFC would lend to you when they are convinced of your repayment capacity and find comfort in your proposal.

Anytime when you are in need for money in India, personal loan has always been a quick resort. Getting personal loan is not tough in India. However, there are certain eligibility criteria that an individual has to meet in order to get a personal loan. Among the long list of eligibility criteria, CIBIL is one of the main factors. This will help the banks or lender to analyze the financial credibility of the applicant or borrower. Lender will have clear access to how much debt the applicant has and if he/ she have made any defaults in make regular payments towards loans or credit cards or any other debts.

What is the impact of low CIBIL score?

CIBIL score is analyzed at an individual level. This rating will help in understanding the financial credibility of the person. Some of the main aspects covered in CIBIL score checks are:

  •     Total outstanding amount due to lenders
  •     Repayment history of all loans
  •     Details on number of loans
  •     Latest information of recent loans taken
  •     The overall credit mix
It is considered as bas CIBIL score if one of these factors is affected at the individual level.

Here is how you can get personal loan irrespective if your CIBIL score is low:

The good news is that bad credit score or CIBIL score does not mean it is not possible to get a personal loan. It is still possible to get a personal loan with low credit score. Let’s find out how to get it!

Apply personal loan at small banks:

Most of the big banks will usually look into CIBIL score at high level. If the rating is low they will directly reject the loan without reconsideration. Instead, small banks will dive deep into the CIBIL scores to find out when the applicant had defaulted payments, what was the percentage of debts at that point in time, what is the current income and can the loan be repayment without any issues. Based on these analysis small banks will approve loans. When CIBIL score is low getting loans from small banks is possible however the rate of interest will be different from what big banks offer.

Make use of loan facilities of non-banking financial institutions:

Apart from banks, there are plenty non-banking financial institutions that offer loans to individuals all over India. When the CIBIL score is low, approaching these non-banking financial institutions will be a smart idea as they will be more liberal than banks in India. One of the main reasons why people hesitate approaching non-banking financial institutions is that the rate of interest here is high and not affordable by many.

Compromise on interest rates and other charges:

When CIBIL score is low, it is essential to set your mind that you might have to pay high rate of interest to the bank to get a personal loan. Most of banks and non-banking financial institutions will offer loan if there is low risk of loss of sanctioned loan amount. However, they will charge high rate of interest on the loan due to high risk of default.

If current income is good and the impact on CIBIL score is due to default 5 years back:

Any impact on CIBIL scores will last there for years. Even if a payment was delayed for 5 days it will reflect in the CIBIL score for more than 2 year. Due to this reason many banks reject loan. However, there are certain banks that will check when the CIBIL score was impact and if the applicant has good income presently they will be ready to offer personal loan at low rate of interest for a longer tenure.

Peer to peer lending:

Though this is very popular outside India, it is slowly being implemented in India as well. There are many people who are trying to explore this opportunity recently. There is less scope for CIBIL score, more importance is given to the current income and repayment capacity of the borrower. Those who would like to invest in high return options choose peer-to-peer to lend to those who are looking to take loans.

Consider collateral loans:

When CIBIL score is low and if you need personal loan at low rate of interest, then it is good to opt for a collateral loan. Some type of asset has to be offered to bank as security to get the loan approved and the asset will be released by the bank once loan is fully repaid by the borrower. In case if the borrower fails to repay the loan, bank will sell the asset to adjust the loan amount. As the risk level is low for banks on collateral loans, the rate of interest charged on this type of loans is also low.

Make use of spouse CIBIL score:

Those who are married and have low CIBIL score should first think of making use of spouse CIBIL score to get loan. The two ways to get loan approved is either to apply for a joint loan that will consider spouse CIBIL score or simply get your spouse to apply for personal loan. This is one of the best and smartest options to get personal loan as you are giving less scope for banks to judge your credibility especially when your CIBIL score is low.

Factors considered by banks and financial institutions before offering personal loan to an applicant:
  •     Net salary
  •     Locality of stay
  •     Expenditure trends
  •     Educational qualification
  •     Asset holding and Investments
  •     Utility and mobile bills
  •     Form based psychometric analysis
  •     Credit card bills and online spending behavior etc.

Make use of the above listed options to get personal loan in India even when CIBIL score low. Some of the top lenders of personal in India are HDFC bank, ICICI bank, Indus Ind bank, Axis bank, and Canara bank. Go through the terms and conditions of the bank or non-banking financial institutions before taking a personal loan.

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