28 year old Suraj Manjule had a bright future. Ever since he went to the Government school in Solapur, Suraj had a burning passion that his teachers recognised. He stood out his class in academics and sports and as expected migrated to the Mumbai the city of dreams in 2014 a few years later. With his impeccable manners and efficiency, it took him little time to get a job in an advertising agency. Within a couple of years his stellar work as a copywriter began getting noticed.
By now, Suraj was used to the city life and was indulging himself with luxuries he had never heard of in his humble village. The only problem was that he used his credit card to fund these luxuries and there soon came a day when he found that he was unable to pay off the debt he had accumulated. Things just escalated thereon and he found himself in a debt trap.
He thought his problems would be solved if he could take a personal loan and pay off his credit card debt in full, but not leading bank was ready to give him a loan owing to a poor CIBIL score OF 650. His only option was bad credit personal loans, but he did not know about them till then. Intelligent as he was, he kept his wits about him and visited a friend of friend Kishore Kadam who was a financial advisor by profession. Kishore gave him some valuable tips on bad credit personal loans. Here is what he said:
While bad credit is not desirable under any circumstances, it is not the end of the world. While traditional lenders may not be willing to give you a new line of credit, since your credit score is poor, there are other non-traditional lenders who are more accommodating about a low CIBIL score.
So how bad is bad credit? Well, a mainstream bank will not give you a hearing for a fresh line of credit is your CIBIL score is below the level of 650 (out of 900). While you must try to improve your credit score if it has fallen to this level, going to bank with a request for a personal loan at this stage will not work out for you and leave you even more frustrated in you time of need.
Typically, NBFCs are not as strict as banks when it comes to the credit score of the individual. There have been instances where individuals with a CIBIL score of 500 or less have also manged to get a personal loan from an NBFC. However, an NBFC may be more willing to give you a personal loan with bad credit at a marginally higher rate of interest, if you can provide some collateral in the form of other assets (mutual fund units, shares or insurance policies). By providing such collateral you may able to tide over your needs for short term funds.
Kishore also suggested that Suraj should put up his need for a personal loan on a P2P lending platform. This is a virtual loan marketplace, where borrowers can directly get in touch with lenders. These sites can be extremely useful to borrowers looking for small personal loans for the short term. One can get a collateral free loan of up to ₹5 lakhs for a tenure that ranges between 12-36 months. The advantage of considering P2P lenders is that they use atypical parameters to assess your creditworthiness, such as your future prospects in your job based on your current job profile, family details your social media footprint and the likes. Based on what Kishore said, Suraj decided that taking a loan from a P2P lender would work out best for him.
Suraj got lucky because he found a friend who gave him sound advice in his time of need. But for everyone does not have a Kishore to go to! Who does one turn to in such times of need? The answer is a credit repair agency. Not only will they help you get a bad credit personal loan, but will also provide a bad credit fix and chalk out your plan of action in order to improve your CIBIL score. A credit repair or credit health agency maintain a database of lenders and are in the know of the terms and conditions for credit assessment. They are thus equipped to find you a match in a lender when you are plagued with financial woes.
Finally, a bad credit personal loan is a great way to improve credit. Suraj took a loan of ₹ 1 lakh for six months from a P2P lender. By repaying his credit card debt in full and making regular repayments on his bad credit personal loan he was able to salvage his CIBIL score and bring it up to the level of 750.