No matter how prepared you may seem in life, there may be times when a financial crisis hits you and you find yourself in the need of cash. At such times, is an easy and hassle free loan from a lender who would ideally give you an immediate approval on your application and disburse the loan as soon as possible. It is indeed easy to get a personal loan these days, but in order to get a fast approval on a personal loan you need to have a good CIBIL score.
But what if you do not have a score at all? Is the option of accessing a loan closed for you? Definitely not! There are several solutions. But first we shall learn what credit history is?
A credit history is a report complied with information on how you manage your debts and accounts with various banks. A credit report has information such as your payment patterns, your existing loans, have you ever filed for a bankruptcy and so on. The credit bureaus and credit reporting agencies are the one who maintain you credit score. In India majorly CIBIL is used as a prime credit bureau by Indian banks to assess your credit worthiness. Your credit score is checked by various businesses to not only gages your credit worthiness but also to understand your spending patterns. For example, you land up on your dream job, where you are supposed to handle clients worth millions the company will check your credit history before handing over clients to you to check if you are worthy or not. It’s not only important to have a credit score but also important to maintain it to avoid hassles in future.
Read on to know what you can do if you wish to apply for loans without a CIBIL score and build a credit score.
First up, you need to know the problem at hand. A traditional top of the line lender is unlikely to give you a personal loan without CIBIL score. Therefore, it is best not to waste your time pursuing and convincing them. You may instead consider approaching a non-traditional lender. There are several Non-Banking Financial Companies like Power Finance Corporation, Rural Electricity corp. who have good loan options that you can consider.
The other option is to consider a peer to peer (P2P) lending platform. The advantage of such a platform is that you can get in touch with a willing lender directly. Besides, such platforms consider atypical credit assessment factors such as the future prospects in your job and social media footprint. These factors then enhance the chances of your getting a loan at competitive personal loan interest rates.
When approaching for such options, you will be asked for payment proofs like monthly electricity bill, mobile phone bills and other documents just to evaluate your payment patterns. If you are punctual in making these small payments then you won’t be finding problems finding a loan without a cibil score.
Approaching for such loans has its own disadvantages as well. If you have a good cibil score, the banks approach you upfront for loans and credit cards and you have the power to negotiate on terms like interest rates, tenure and processing frees, in cases of credit cards the annual fees, reward points and many more. But if you are approaching a lender without a credit score you are unlikely to get these benefits.
If you are accessing a personal loan without any pervious credit history, because you were a student earlier, your best bet is to apply for a secured credit before making a loan application. A secured credit card is offered by the top lenders in India against a fixed deposit. The card limit is capped at a certain percentage of the fixed deposit (75-80%). A secured card offers several advantages for an individual applying for a personal loan without CIBIL score.
Firstly, by taking this card you establish a credit record. Secondly, there are little chances of overspending on the card as you know that your fixed deposit will be liquidated in case of non-payment of dues. Finally, a secured credit card gives you the opportunity to build a good credit record a thus get a good score over time.
If you do not have the option of taking a secured credit card against a fixed deposit, you can request a family member (ideally a financially responsible individual with a good CIBIL score) to add you as an authorised user of an existing card that he or she uses. As soon as the primary cardholder authorises you as an additional user you get your own credit card that also establishes your credit history as all the information about the card usage is reported to credit bureaus such as CIBIL.
However do bear in mind, that even though you are supplementary credit card owner, all the details of your usage will show up on the statement of the primary cardholder. What’s more is that, your usage pattern will impact the score of the primary cardholder. Thus if you turn out to be reckless with your credit usage, the primary cardholder will not only be responsible for your card repayments but may also stand to lose CIBIL points if you land him in a debt trap. You must therefore be prudent and judicious with the usage of a supplementary credit card. Besides reckless usage of credit at the beginning of your credit record will not be flattering for your CIBIL score.
If you do not want to consider the credit card option, try getting a consumer loan to purchase a mobile phone or any electric goods. In this type of loan the lender sanctions loan to people who do not have a cibil score. You can go to any electronics shop and opt for such loan which will not only help you build a great credit score but also will help you elevate your score if you make payments on time and yes there is no interest on this type of loan. Just pay a nominal processing fee and get the loan sanctioned in no time and repay the loan without any interest. This is one of the best options to consider if you are trying to build your score from scratch.
Thus, in conclusion, it is fair to say that a good CIBIL score is an advantage when you are trying to get a loan at competitive personal loan interest rates. However, as stated earlier it is not impossible to get a loan without CIBIL score, even though you may have to put in some additional efforts.