Would you ever lend money to a friend if you doubt his repayment capacity? No. Similarly banks and financial institutions want to secure their investments. Hence before lending money they do a thorough background check of the applicant and assess their creditworthiness. Only when they are sure that the borrower has the capability and willingness to repay the money back on time, will they approve a loan application. The credit scoring agencies have made this task easier for the banks. CIBIL keeps a complete record of a borrower's past payment history in a CIBIL report and calculates a credit score. This score is a true reflection of a person's credit behaviour. Banks rely heavily on this credit score to predict the borrower's future financial behaviour.
A responsible borrower who pays his credit card bills and loan instalments on time has nothing to worry. His high credit score will make him eligible for any loan products that he wishes to avail in future. But what if your credit rating is low? Do you stand a chance to get a personal loan without a CIBIL score check? Or will a low CIBIL score ruin your chances of getting loans to fund your requirements?
All the major banks and financial institutions follow a theoretical approach to credit assessment. So even if you have got a genuine reason for a low score, you will not strike a chance here. You will be seen in negative light as a person who might default on repayments and turn into a bad investment. So if your CIBIL score is 650 or less, it is better not to go to a mainstream bank. A rejection of loan will have a further negative effect on your score. Try out some of the following options.
You will have a better chance of striking a deal here. The target segment of NBFCs is mostly borrowers who the mainstream banks do not entertain. NBFCs are more flexible with the credit scores and have lower cut-offs than banks.
There has been a significant growth in online marketplaces which bring together lenders and borrowers. If you have an urgent requirement of cash and you do not have sufficient time to rebuild your score you can try this platform. Here CIBIL score is not the only eligibility criteria. Individuals who offer loans here consider a holistic profile of the borrower. They screen the borrowers on various parameters like education, income levels, demographics, socio-economic conditions etc. and set interest rates according to the risk level involved. Since the lending standards are more lenient it is a good place to obtain personal loans without CIBIL score check.
If you have a reasonable explanation for having a bad CIBIL score you will have better prospects of getting the funds at reasonable rates. Lenders excuse cases where a loss of job or emergency hospitalization caused the score to plummet.
These are non-bank entities who offer personal loans without CIBIL score check. They mainly target individuals with a low CIBIL score who face rejections from the banks. The only downside is that the interest rates are comparatively higher than the traditional banks. However it is justified to an extent considering that they offer collateral free loans to high risk individuals with a low CIBIL score. Private lenders do not have any application fee, they process the loans much faster and you can have the funds in your account in 1-2 days.
If your credit score as well as other eligibility parameters fail to impress most lenders then you should look out for secured loans where you use your asset as collateral to obtain funds. The lender will withhold the collateral in case you default. Secured loans are beneficial as they can be obtained at an interest rate lower than that of an unsecured loan. Amount of loan that can be borrowed depends on the market value of the asset used as collateral. Gold loans or loan against property are good options to get a descent amount sanctioned.
With P2P lending, NBFC and private lenders burgeoning in the Indian market it is no longer a daunting task to obtain a personal loan without CIBIL score check. What banks consider bad credit may not be that bad for other lenders who are ready to take risk and invest their money for higher returns. However this does not take away the importance of maintaining a good CIBIL score. While you secure a personal loan without CIBIL score check, you should alongside make all efforts to rebuild your credit. Order your CIBIL report and identify areas that require improvement. Work on your financial habits and payment behaviour so that a high CIBIL score helps you take charge of your financial life.