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Now get a loan with bad CIBIL score

  Wed, Dec 21, 2016     written by : CSF-Team
Credit Score

A CIBIL score is a reflection of your past financial habits. The score gives a true picture of how you have handled your loans and credit cards. If you are looking to borrow money then unquestionably this score will be used by the lender to decide whether you are a worthy borrower or not. A high score is a sign of responsible financial behaviour and it increases the chances of approval. But what if you do not have a very good credit score? Does it mean that you have struck a dead end? Well the answer is NO. (Hope this gives you a sigh of relief!)

There are lenders who realize that a low score does not always mean that a person is at a risk of defaulting. They feel that a CIBIL score evaluation is a very theoretical and impractical approach of credit assessment. So when you lose all hope to get approvals from the big banks and financial institutions in the market, don’t despair. There are lenders who are ready to listen to your side of the story and lend you money if they are convinced about your credibility. You can tap into the following sources to obtain bad credit personal loans.

Peer to peer lending

With the advent of technology getting personal loan for low CIBIl score is no longer a daunting task. Peer to peer lending market that looks at the holistic credit profile of the borrower, is burgeoning in India. It connects people who are looking to invest their money at good rates with those who are looking for loans. So it does not matter if you have a low credit score. As long as you can win the trust of the lender and show that you are a genuine borrower, you can have a chance at this platform. Peer to peer lenders are only concerned about your intention and ability to pay back the loan along with the interest. They are ready to look beyond your mistakes and CIBIL score if you provide sufficient information that you are a deserving candidate.

Non-Banking Financial Cooperation

While banks have very strict guidelines of credit scores, NBFCs are usually more flexible with the credit score cut offs. If your credit score is near the borderline and you are finding it difficult to get bank approvals you can try your luck here. Additional parameters like your job stability, income, monthly expenses etc. are also evaluated by the NBFCs. If you fare well on them you may get a better negotiating power. For example you may have defaulted 3 years back due to a job loss, but now if you have a good income and a repaying capacity you can approach the NBFCs with your monthly statements and income proof and they might approve your application despite a bad CIBIL score. If you have an asset, fixed deposit, equities or gold that can serve as a security then you can get lower rate of interest even on loans for bad credit. The asset safeguards their interest and reduces the risk of losses.

So if you have a CIBIL score of less than 650 do not apply to mainstream banks. A rejection will only lower your score even further. Instead put your credentials in order and apply for loans for bad credit. Unless you had a wilful default you can strike a chance of cracking a deal here.

The only downside of loans for bad credit is that they come at a relatively higher rate of interest. Since lenders take a greater risk in lending money to people with a low score, they offset that risk with higher profits. If you find such loans too expensive then the alternate way is to postpone your borrowing for a few months and direct all your efforts to improve CIBIL score first. Pay your dues on time, do not miss any instalments, maintain a low credit utilization ratio and have a good mix of both secured and unsecured loans in your credit basket. If you keep a check on your financial habits your CIBIL score will definitely show improvement. You can then expect to get loan approvals at reasonable rate of interest.