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The right way to apply for a personal loan with a low CIBIL score

  Fri, Apr 21, 2017     written by : CSF-Team
Low CIBIL Score

There are times in life when you are faced with a sudden financial crunch and you are in urgent needs of funds. All you need at such times is a lender who gives you a quick and hassle free. To get over this financial emergency, you think it is best to apply for a personal loan and to your horror you discover that your loan application has been rejected because of a poor CIBIL score. There is barely anything more nightmarish than this! If you are currently in a situation like this, we have some good news for you. A low CIBIL rating is not the end of the world. You can still get a personal loan with a bad CIBIL score.

The impact and importance of your CIBIL score

But before we get into how you can go about getting personal loan bad CIBIL score, let us tell you a thing or two about your CIBIL score. Your CIBIL score is a three-digit numeric between 300-900, assigned to you on the basis of your credit history. This is nothing but a record of how you have serviced you past loans and credit cards. There are several factors that impact your CIBIL score. The major factors that impact your CIBIL score include the following:

Repayment history- This is the most important factor impacting your CIBIL score, therefore it is mandatory for you to service all your credit in a timely manner.

Credit utilisation- The amount of credit you use against the total amount of credit made available to you is called the credit utilisation. Ideally your credit utilisation should not exceed 30%.

Age of credit- The longer and blemish free your credit service record, the more it augurs well for your CIIBIL score.

No of inquiries- Each time you make an application for a fresh line of credit, the lender requests for your CIBIL score and it gets recorded as a hard inquiry on your credit report. A large number of hard inquiries portrays you in bad light and it is assumed that you are credit hungry. Besides, your credit score takes a hit each time a hard inquiry on your CIBIL report.

A good mix of credit- You need to have a good balance of secured and unsecured loans in order to maintain a good CIBIL score. A home loan or a vehicle loan with a credit card or two is considered a good mix of credit.

Each of these factors have a bearing on your CIBIL rating. A poor CIBIL score is regarded as a measure of poor financial health and make a lender wary of giving you a loan or a credit card as the "risk" attached to you will be considered as larger. Even a small personal loan may be difficult to procure under such circumstances from a traditional lender. You therefore have little choice to resort to but apply for personal loans bad CIBIL score. However, you must tread with caution while doing so. Here are some steps to bear in mind while making an application for personal loan bad CIBIL score.

Consider your spouse’s credit score

If you have the option, consider applying with your spouse for a joint personal loan from a lending institution. Often a good CIBIL score of your spouse can help bring up your joint average CIBIL rating thus making you eligible for a personal loan.

Get your income statements in order

If you have a good salary now, as compared to the past, convince the lender that you are confident of making timely repayments by presenting your income details for a period of at least six months. Some traditional lenders may be willing to look beyond your poor CIBIL score, based on a higher salary and a job in a recognised firm. However, these banks or NBFCs may be willing dole out personal loan bad CIBIL score at a higher rate of interest, as compared to rates of interest applicable to an individual with a good CIBIL score.

Consider a P2P lender

If the above options do not seem viable to you, do not loose heart. You may still be eligible for personal loans bad CIBIL score from a P2P lender. These are non-traditional lenders who provide a virtual marketplace where lenders and borrowers can connect with each other directly and match requirements with loan amount and loan terms.

P2P lenders tend to look beyond the CIBIL rating of an individual, and consider factors such as income, socio economic conditions, educational background, social media footprint and future financial prospects based on current job profile. These factors help in a holistic assessment of an individual’s credit assessment. However, you may have to provide additional documents to prove your eligibility to such lenders.

Thus, you can see getting a personal loan bad CIBIL score is not impossible. While you must try to improve your CIBIL score eventually, you can indeed get over your financial emergency with the aid of a personal loan bad CIBIL score.