Due to online processes, the popularity of instant Personal Loans has grown significantly over the past decade. You get relatively easy access to funds without worrying about putting up collateral, and there are no restrictions on using funds.
However, if you are applying for an instant Personal Loan, having the right CIBIL score is imperative. Since Personal Loans are unsecured, this three-digit number represents your creditworthiness. It ensures the lender about your reliability as a borrower to pay off the loan on time and without fail.
But what if you have a low CIBIL score? In that case, you need to keep a few pointers in mind to get access to financial products.
Top 5 – Tips to Get an Instant Personal Loan with a Low CIBIL Score
Here are some tips to get a Personal Loan even if you have a low CIBIL score.
Meet the Income Criteria
Every financial institution offering Personal Loans has minimum income criteria, meaning you need a certain monthly or annual income to service the loan. Now, if you can meet and surpass this requirement, you can get a Personal Loan even without a good CIBIL score.
Now, the reason behind this tip is that, with proper income support, you can easily pay off the loan, and the chances of default are low. Hence, the lender will be convinced and can extend the credit. However, remember that this parameter will change as per the selection of the loan provider, so check the income-related criteria before applying.
Another point to remember is that you can add your income from other sources, like rental income, interest income, etc., to bolster your total income and be eligible for a loan.
Opt for a Joint Personal Loan
Opting for a joint credit is another way to improve your eligibility for a Personal Loan. Now, in the case of joint loans, the lender will consider the borrowing capacity of both applicants. So, even if you have a low CIBIL score, but your co-applicant has a strong credit profile, you can get the loan on good terms.
Additionally, when you apply for a joint Personal Loan, the lender will factor in the total income of both applicants to determine the loan eligibility. So, you can easily surpass the monthly income requirement and get the funds you need.
Opt for a Lower Loan Amount
Another way to get a Personal Loan with a low CIBIL score is to settle for a low credit amount. Considering your poor credit profile, the lender will perceive you as a high-risk borrower and hesitate to approve the loan amount you want. From the lender’s perspective, the chances of defaulting are higher, and they want to mitigate their credit risk by not approving a high Personal Loan amount.
However, if you apply for a lower credit amount, the chances of getting approval are higher as the lending risk is relatively low in such cases.
Ask the lender to consider your case as an NH or NA
There are many reasons behind a low credit score, and credit inactivity is one of them. So, if you are going through the same, and there has been no credit activity in your account in the last 36 months, then ask the lender to consider your case as NH (No History) or NA (History not Available).
In such situations, you can talk to the lender and discuss the reason for the credit inactivity and, thus, for a low credit score. Once you discuss this with the lender, you can convince them to sanction the loan you need.
Apply for a Loan from your Trusted Financial Institution
The next strategy to get a Personal Loan with a low CIBIL score is to apply for one with which the financial institution already has a working relationship. For instance, you have already serviced other loans from a financier and completed the repayment on time and without defaults. In that case, that financial institution has a good working relationship with you and may trust you with another loan even if your current CIBIL score is not up to the mark.
These are some effective strategies to get a Personal Loan even without a good CIBIL score. Now, let’s understand the significance of this three-digit number and how you can better it for a more favourable borrowing experience.
Significance of CIBIL Score and Ways to Improve it
Here is the importance of having a good CIBIL score.
- The primary significance of a good CIBIL score is that it puts you in a position of strength where you can negotiate a better loan deal. This will include securing a lower interest rate, more flexibility in repayment, and a longer tenure.
- With a good CIBIL score, you can also apply for a higher loan amount. Since the lender is assured of your capacity as a borrower, they may extend a higher loan amount or the exact amount you want.
- A good CIBIL score can also result in accelerated approval of your loan application. Since you have met or surpassed the CIBIL score needed for loan approval, the lender may approve your loan application without delays.
- Another benefit of having a good CIBIL score is access to different offers like minimal processing charges, nominal foreclosure fees, etc.
Moving ahead, here are the strategies you can follow to better your CIBIL score.
- Paying the dues on time is one of the easiest ways to improve your CIBIL score. This includes loan EMIs and credit card bills.
- Maintaining a low credit utilisation ratio also helps to better your CIBIL score.
- Not applying for multiple loans and credit cards at once is crucial in bettering your CIBIL score.
- Checking for errors in the credit report and correcting them can also affect the CIBIL score positively.
- Maintaining a healthy credit mix is another way to better your CIBIL score. It means having an adequate number of secured and unsecured credit on your portfolio will improve your capacity as a borrower.
Final words
Personal Loans can be a great option to meet all financial requirements, especially emergencies. However, to ensure you get the loan amount you want without any delays, you need to have a good CIBIL score. But, even if you don’t, the strategies mentioned in this article can help your cause.
