Personal loans can be quite useful in tough times when you are short on cash. Since they can be used for a variety of purposes, including medical emergencies, higher education, buying used cars, etc. they are also the most popular form of loans taken by the people.
Although personal loans are the best way to get a reasonable amount of money in a short period, obtaining them can be tricky. If your CIBIL score is poor, then your chances of getting a personal loans become extremely less. However, if you don’t have a CIBIL score at all then it can be an even bigger problem.
Credit lenders have become extremely cautious since the past few years. Many loanees end up being added to the loan defaulters list, or delay EMIs time after time which creates a hassle for the lenders. Thus, the lenders use a metric which we know as the CIBIL score or the credit score to identify the creditworthiness of a loan applicant. If the person has a low creditworthiness (judged by their credit score itself) then it's risky to lend credit. Thus, the lenders usually reject the application in this situation.
Having no credit score at all may seem like a terrible thing if you are seeking a loan yourself. However, it is often better to have no score than to have a poor score. This is because in the former case the lender can clearly know that the applicant has a low creditworthiness. However, in the latter scenario they can give the person the benefit of doubt. So, even if you don't have a credit score you can convince the bank that you are a responsible person and can certainly pay your loan within the tenure. It also helps if you have ownership of real estate or some other assets as they can be used as collateral against the loan.
We have already established that having no CIBIL score is not always a terrible thing. So, can you get personal loans without a CIBIL score? The answer is "yes".
It is very much possible to get a personal loan whether you have a credit score or not. In fact, people with a bad score can sometimes get a personal loan too. However, this doesn't mean that getting one is easy in either situation. Obviously, a bank or any other kind of financial institution is only comfortable with sanctioning a loan when the applicant has an above average CIBIL score. So, when you are not able to provide the same you have to put some additional effort to convince them. You can also try some other ways to get a personal loan. These include:
Since the main problem with getting a personal loan when you don't have a CIBIL score is the lack of credibility, you can make the process easier for the lender by getting a family member or your spouse who has a good CIBIL score themselves to co-sign the loan with you. This way you can balance the equation and increase your chances of getting a loan.
Another good option to get small personal loans is through P2P lending platforms. P2P loans are becoming quite popular lately. So, you can definitely give it a shot. However, bear in mind that you may not always get the loan amount of your choice, and may even have to pay higher interest rates in comparison to the traditional loans.
If you can get a personal loan without a CIBIL score, then good for you! However, you must still build a healthy credit score because in future you may really need it. You will be able to have way more options to choose from when your credit history is excellent. Plus, many financial institutions have also started screening job applicants on the basis of their credit history (SBI was one of the first to make it mandatory for the job applicants to have no instance of loan defaulting). Thus, it’s really important that you take your CIBIL score seriously.