Banks do a thorough background check before sanctioning a loan or a credit card. They check the CIBIL score of an individual to determine whether he has been responsible with his past loan repayments or not. People with a bad credit score often find it difficult to get loan approvals as they are considered as risky customers who are likely to default on loan payments in future.
A bad credit score can be the result of various reasons like delayed payments of credit card bills, non-payment of loan instalments, multiple loan enquiries, over utilization of credit limit etc. If you have a poor credit score then gaining the trust of the lending institutions will be quite a challenging task. At such times securing a bad credit Personal loan will be the easiest way to fund your requirements for marriage, vacation, home renovation, education or any other legal purpose. Though most public and private sector banks like ICICI, SBI and HDFC are very strict about their credit requirements; there are other avenues that can assist access to personal loans for bad credit.
Credit Sudhaar Finance – A group company of Credit Sudhaar focuses on extending loans to the people with low credit score. So if you are looking at a loan for low CIBIL score, then look no further. This is first of its kind of loan offering for individuals looking for a credit solution.
Secured personal loan- Offering securities, shares, gold, fixed deposit or any other asset as collateral can help you get a personal loan even if you have a bad credit score. Since the loan amount is secured by the asset the lender’s risk is reduced. They can sell off the asset to recover their money in the event of default.
Local Bank- If your credit score is on the borderline you can contact the local bank with whom you have had a long term relationship. It is more likely to be sympathetic to your requirements than any other unknown lender. Your chances of approval will increase if you have all the documents in place and meet the other eligibility requirements.
High income level- Even though a credit score plays a crucial role in loan approvals it is not the only aspect that matters. A significant weightage is also given to the debt to income ratio. It is the ratio of the monthly loan obligations you have as compared to the income. If this ratio is less then you will have enough cash to spare for new loans. Hence if you can provide sufficient income proof to show that you have a good repayment capacity then it is likely that you will be approved for a personal loan even if you have had a chequered credit history.
Private lenders or Non-banking financial institutions- A bad credit score is a very relative term. Something that seems risky to one lender may be seen as an opportunity by some others. Try your luck with some NBFCs and private lenders who might be willing to grant you loan. But these loans usually have a higher rate of interest and a short payback period.
Co-signer- You may ask some family member like your spouse or parent who has had a good credit history to assist you in getting the loan. They can either be a co-applicant or they can co-sign the loan with you. The co-applicants or the co-signer’s credit score will increase your chances of approval. Use this option only when you are completely confident of your capacity to repay the loan. That’s because in case you default the bank will try to recover its investment from the co-signer. This will strain your relationship with the person who trusted you and helped you in difficult times.
The above tips will help you secure a personal loan with bad credit. Once you get it make sure you make timely repayment of all instalments. Responsible credit behaviour over a period of time will help in raising your credit score. You can also take some other measures like reducing your utilization ratio and paying pending dues to improve your credit score. Maintaining a good credit score helps one to easily gain access to funds in times of need.