Low CIBIL Score is a major challenge when you apply for a Personal Loan. The chances of rejection of your loan application is higher when you have a CIBIL score below 750. In order to understand CIBIL Score, How to get a loan with low CIBIL score & how you may improve your CIBIL score in short period of time we have discussed them in detail below. We are hopeful that it will help you get your loan application approved easily even with a lower CIBIL score & help you increase your CIBIL score quickly.
What is CIBIL score?
CIBIL is meant for Credit Information Bureau India Limited. It is India’s first credit rating agency. This organisation maintains the credit detail of each and every individual. They provide a three digit numeric summary of all your credit history. This three digit numeric summary is called your CIBIL score.
You credit score may be anything between 300-900. A healthy credit score is necessary for approval of your personal loan or other similar loans. It is generally advisable to maintain a CIBIL score of above 750.
Why CIBIL score is checked before any loan approval?
Whenever you apply for any loan, Your CIBIL is checked. It reflects your credit history and repayment behavior. Lenders want to lend you considering the timely repayment. Defaulters are not entertained due to their bad repayment history
How to get a loan with low CIBIL score
You may get a loan even with low CIBIL score. There are NBFCs, private lenders who provide loans in such cases also. Following are the options of loan in this case:
- Loan against collateral like your Fixed deposit, Gold, Property etc
- Joint loan applications like your spouse or partner becomes a co-applicant of loan
- Higher salary or income, You may show it for your higher repayment capacity if your credit history is not healthy. This will help lenders to assess their risk of loan repayments.
- Non Banking Financial Companies (NBFCs) like Bajaj Finserv Mahindra Finance provide loans in such cases
- Private lenders in market do provide loans but at a higher rate of interest
- Peer to Peer lending like small groups of people runs a lending committee with their monthly contributions
- Co-operative banks provide loans against your property on lower rate of interest compared to NBFCs or private lenders in the market.
Tips to follow to improve your CIBIL score :
Our Loan Experts at Loan Guru have prepared a wonderful list of Tips through which any individual may increase his CIBIL rating rapidly.
- Check your CIBIL report and analyse the defaults
- Do not apply continuously if your credit card or loan applications got rejected
- Clear off your credit card outstanding bills
- Do not exceed more than 30% of your credit card spending limits
- Increase your credit card limits and maintain timely payments
- Do not go for settlement of your credit cards, pay in full and go for closue
- Never let your EMI payments delay or bounce as per schedule
- Apply jointly for loans to improve CIBIL ratings
- Minimize your borrowings or credits gradually
- Take loans from NBFCs and make timely repayments
Now these tips will help you get your desired loan over a period of time. It hardly takes 6-9 months to improve your CIBIL. to sum up we can say that it is easy to get the loan approvals even with low CIBIL and there are ways to improve your CIBIL. Thus its time to act for you know. If you need any assistance in loan application or you have any loan query then please contact us via comment box given below.