Your CIBIL score is one of the foremost things lenders and banks look at when applying for a instant loan. One of the most severe hazards a creditor faces when making a loan is not receiving the money back. As a result, getting a credit check is one of the essential elements to consider when giving a loan. A person’s or a company’s CIBIL score is a reflection of their ability to repay debts. A high CIBIL score enables you to get credit quickly and at a cheaper interest rate. But what if your CIBIL score is low, or you don’t have one at all? Is it still feasible to get a loan even if you don’t have a CIBIL score? In this article, we’ll look into the solutions to all of these questions.
How can I get a loan if I don’t have a credit score?
With a poor or no credit score, there are various options for obtaining loans:
Reach out to NBFCs or HFCs:
In circumstances where an individual’s CIBIL score is low, non-banking financial firms (NBFCs) and housing finance companies (HFCs) are regarded as the most significant sources of credit. These firms usually charge higher interest rates than banks, but they are willing to lend even to those with bad credit.
Use your salary slip as proof:
It can operate as a security for banks if you have a steady salary and revenue coming in. Even with a low CIBIL score or no CIBIL score, a loan can be obtained if the borrower has a constant source of income.
Collateral based loans:
Personal loans are frequently available without a security deposit, but only to those with a high CIBIL score. On the other hand, banks will need security if you have a low credit score. In this case, the borrower can use any asset as collateral for the loan amount.
Obtain a Guarantor:
If the guarantor has a consistent income, the loan will be secured.
If your CIBIL score is poor, attempt to improve it to make obtaining credit easier over time.
How can I improve my credit score?
In India, there are several ways to increase one’s credit score:
Low credit utilization ratio:
Your credit score will be badly impacted if you spend more than 30% of your credit limit. As a result, keep your credit utilization ratio low.
Build good credit history:
It’s also a good idea to keep previous credit card accounts open to extend your credit history.
Avoid applying for new credit:
Applying for many credit card accounts and loans in a short period is not a good idea. Instead, only apply for new credit if you require it.
Pay your dues on time:
Your credit score will be affected if you miss a payment due. As a result, it’s a good idea to schedule payment reminders to avoid late fees and a decline in your CIBIL score.
Should I apply for a lower loan amount?
You are a high-risk candidate for lenders if you have a low CIBIL score or no current CIBIL score, implying low creditworthiness. On the other side, if the requested loan amount is less, the lender may be more willing to provide the funds. A reduced loan amount will also be easier to repay, perhaps improving your CIBIL score.
Can I get a loan if I am a CIBIL defaulter?
Our CIBIL score is negatively impacted when we default on our loan payments. CIBIL adds us to the defaulter list when we stop making payments on our loan. This makes securing a loan from a bank or a non-bank financial institution extremely difficult. As a result, one’s options for obtaining a loan amount are dwindling. Here are some possibilities to consider in such a situation:
Loan against collateral:
Financial institutions may be prepared to lend you money if you have a fixed deposit asset.
Guarantor for the loan:
If you have a guarantee for the loan amount, the risk of lending you money is reduced, and financial institutions may be more inclined to give you money.
Approach on Online lender:
If traditional financial institutions reject your loan application, you can always turn to an online lender for help. When opposed to financial institutions, internet lending platforms are frequently more tolerant when dealing with applicants with poor credit scores. They may also be accomplished to provide you with a loan with no collateral.
Present salary slip:
Providing proof of consistent income may assist in obtaining credit from financial organizations.
Take out another loan in your name if you’re on the CIBIL defaulter list. Ideally, pay off all of your present debts before moving on to obtaining further loans.
How can I get a personal loan with a bad CIBIL score?
With a low CIBIL score, obtaining a personal loan can be difficult, but it is possible to do so utilizing the following methods:
Evidence of income:
Your loan application will be more advantageous for the lender to evaluate if you have a good steady income. Therefore, a personal loan is feasible, albeit you may be susceptible to higher interest rates.
Low loan amount:
As previously said, the smaller the loan amount, the lower the risk to the lender of you defaulting on the loan. Therefore, if the loan amount is smaller, you will find it easier to repay the loan.
Get a Guarantor:
Having a guarantor with a robust credit score might speed up the process of getting a personal loan. But, first, make sure that all of the KYC requirements are met, including submitting any required papers.
Check for errors in a credit report:
Check your credit statement for any inaccuracies or misreporting regularly. Also, make sure your credit report is always up to date with the most recent information.
Explain the period of no credit history:
If you haven’t used credit in 36 months or more, your credit report may be designated as NA or NH, which will drop your CIBIL score significantly. However, if you explain your inactivity to your lender, you might be able to get a personal loan, albeit at a high-interest rate.
How to get a personal loan for a CIBIL score of 550 or less?
A CIBIL score of less than 550 is inadequate to qualify for a personal loan from a traditional financial institution. This score suggests that you have not handled your credit responsibly. For a personal loan, most financial institutions want a CIBIL score of 750 or higher.
Nonetheless, if you have a CIBIL score of 550 or less, you can get a personal loan if you have a good income, a rise in your salary, prudent spending habits, and few liabilities.
Microfinance companies that provide personal loans with a credit score of 550 can also be approached. Get in touch with Everyday Loan India for instant loan.
