I know you will be familiar with these words, that you can not get any type of loan with a bad credit score. If you go for a personal loan then it becomes harder because it is an unsecured loan and there is no collateral against your loan. But here we are to help you. Every problem has its solution. So let’s talk about its solution and learn about How to get Personal Loan With Low Credit Score.
First, let’s know why banks do not give any loans when your credit score is low. Actually, there are a few reasons for low credit like the use of credit cards, delayed payment in any loan or settling any loan.
What Is a Credit Score?
Credit score is the 3-digit number which represents your financial health. It is generally represented as the CIBIL score in India. CIBIL is a company which gives you a rating on your financial health which is a cibil score.
This is like your character certificate in the financial field. This depends upon your past loans and credit cards. This also gives information about how you paid all your past loans.
It helps banks decide whether a given person is eligible to get other loans and credit cards.
Credit scores can be anywhere between 300 to 900 on the scale of cibil scores. If your score is below 700 then it is not good. If your cibil/credit score is more than 700 then it is considered as a good credit score. But to get personal loan with bad credit is very difficult in India.
Here a question arises- ‘How can I increase my credit score?’ But every problem has a solution.
Reasons For Low Credit Score
There are a few reasons why your credit score is low. By knowing the reasons for low credit scores you can easily use tips to get personal loans with low credit scores.
- Maybe you have many loans. It makes the lender think about ‘Will he/she be able to give EMI on time?’
- If your EMI is higher than your salary. Then the lender thinks ‘Is his/her salary enough to repay all loans on time?’
- Regular use amount from credit cards affects the credit score most. Financial advisers advise you to use less than 30% of your credit limit. If you use more then the lender assumes you are totally dependent upon credits and loans.
- May not have any credit history. If you are thinking that you shall not take any credit card so your cibil score should be high, then you are thinking wrong. If you don’t have any credit card and past loan then your credit history will not be created. Using regular credit cards and repaying on time increases the trust of lenders. So use your cards and repay on time to maintain a good credit score.
- Not repaying your card bills on time or having overdue your cards. So clear your overdue and repay all bills and EMIs on time.
- Applying for loans many times. As the number of inquiries for loans in a given time increases it decreases your credit score.
- If you have settled any past loan/credit card. If you have taken any loan or credit card and have not paid that loan till now then it decreases your credit score with time.
- There may be some technical error or error by the bank. Maybe you have not made any delayed payment and still showing delayed payment or you have closed any loan and are still showing open on your credit report. This also decreases your credit score. So to clear this contact to your bank or cibil company.
How Does The Cibil/Credit Score Work?
Your credit score is considered by all the banks/lenders to provide you loan or credit card. Then Why do lenders not provide loans to low credit score persons?
The reason behind this is that – low credit scores show you are highly risky and maybe you will not pay your debt totally. Any business person doesn’t want to lose their money. So they don’t provide loans when your credit score is low.
The condition when your credit score is good then you can get debt from any lender. Just relax and apply with us – click here. You can also get a much better rate of interest and many other offers due to your good credit history.
Importance of Cibil/Credit Score For Personal Loan
All loans are divided into two types – one is a secured loan and the other is an unsecured loan. In a secured loan, you give any collateral on behalf of your loan. In this, if you do not become able to pay your loan then they will seize your collateral property.
In unsecured loans (personal loans or credit cards). There is no need for collateral, the lender can not seize any property. So the lender needs a trust that you shall pay your loan.
This is shown by your credit report. In this, it shows the past conditions of your finances. If you have paid all your debts on time then the lender assumes he/she will also repay your loan and gives then debt easily. This all is represented by your credit report. Of course, this is not the only factor to get a loan. But it affects a lot.
If your credit score is good enough then you can get a good rate of interest and many other offers like part payment.
If your credit score is low then may be lender reject your loan. And when your credit score is high then they will approve your loan easily.
If your credit score is low then it also doesn’t mean you can not get a loan from anywhere. Here are some ways and tips by using these you can get a loan with a low credit score.
Tips On How To Get Personal Loan With Low Credit Score
Contact with Loan Agency (Easiest way to get personal loan with low credit score)
This is the best option. You need not pay any extra money. You need not worry about any issues. Loan agency has many banks to work so they can select the best bank for you easily. They have great expertise in their sector and they know it very well, from where you can get a loan easily with low cibil.
In this you can get many other profits like they take care of your documentation process. They save you time. You didn’t have knowledge of which bank is best for you but they know. But the most important point to consider is that they must be reliable. We are one of them, we have been working for the past 20 years in this field and can assist you, help you. You can contact us – Crdtlin Capital.
Apply For an Instant Personal Loan
There are a lot of options for instant personal loans. You can get instant personal loans easily with a low credit score. But the negative part of this is that you will get a high-interest rate on your personal loan. Just you need to show a good income and good transaction in your account.
There are a lot of apps which provide loans very easily just in 5 minutes. One of them is kreditbee, incred.
In this, you can show side income too. Just need that income should be reflected in your account statement.
Some Banks Give Loans Without Checking Your Credit Score
There are a few lenders which didn’t ask for your credit report or credit/cibil score. One of them is finnable. There are other pre-approved loans provided by many banks generally from NBFC banks. There is no need for a good cibil score because they didn’t check about this.
You can also get some secured loans where you do need not to show your credit score. Just you need to have a PAN CARD, and an AADHAR CARD is KYC details. One of the best options is a Gold Loan. In this, you need not to have any credit history. By using this you can also your credit score.
Good Transaction In Your Account/Good Earning Potential
The banks which didn’t consider your credit score, consider transactions in your account. They ask to prove that your income is sufficient to pay their EMI. If you have got salary increments or have other side incomes then you can easily get loans from these banks.
This loan is generally provided by NBFC banks and app loans. It is sure that you get a high rate of interest on these loans. You must represent these all details in front of lenders which will encourage them to approve loans with low credit scores.
Maybe you do not get your desired amount but something is better than nothing. Also, you shall get one more chance to increase your credit score easily. You can directly Apply For a Personal Loan.
Show a Stable Job With a Reputed Employer
Banks/NBFCs and lenders also consider the company in which you work. They also categorise the companies in grades. If you are working in a reputed company, corporate/MNCs or organization then they consider the high stability of your job and high chances of an increase in your salary. So they consider you a good customer while having a bad credit score. They can approve your loan easily if you have a good job history and your employer has a high reputation.
Make your credit health
Ask for Less Amount Because It’s Risky For the Bank to Give More Amount
As your low credit score shows you are not an ideal customer. All lenders become doubtful of you. So if you want to get a loan with a low credit score apply with a lower amount than your eligibility. If you have eligibility of 20lacs then just apply for 3-5 lacs maximum. This gives lenders confidence in you. Also, they feel less risk to finance your fund.
Use a Co-Applicant Having Good Credit Score/ Guarantor for Your Loan
If your credit score is low, you can take a co-applicant or guarantor for your loan. One point that must be considered in this is that the co-applicant or guarantor has a good credit score.
He/she has all the required documents for the banking process like KYC documents and bank details. In this method, lenders consider co-applicants or guarantors for income and better credit scores. This will ensure for approval of your personal loan.
Correct the Mistake In Your Credit Report/Check Errors In Your Credit Report
Might be you have not made any defaults but still showing a low credit score. There may be some reasons like showing delayed payment in your loan while you have paid all installments on time second reason may be you have closed any loan but still show it’s running. For this check your credit report before applying for a personal loan.
Here is the list which shows factors affecting your credit score and weightage too.
Payment history- 30%
Credit exposure – 25%
Credit type and duration- 25%
Other factors- 20%
Request the lender to consider your case with a NA or NH in your credit report
If you have an absence of credit history from the last 3 years or more than 3 years then you can request a lender to apply for your loan with NA or NH. That means your credit history is considered as new.
In this case, your credit score will be considered very low. Bank will approve your loan but you have to compromise with a little higher interest rate on your personal loan.
There are two cases of consideration this way
1)- NA- Not applicable (in this case your cibil score is considered 0).
2)- NH- No credit history (in this case your cibil score is considered -1).
Contact your own bank with which have long relation
You can use one other to contact the bank in which you have your accounts or credit cards. If you have a good amount transaction or generally a good amount in your account then your bank can give you a personal loan. The most important thing to consider in this is you have a long relationship with that bank.
Contact with NBFC and Fintech digital lenders
There are many NBFC banks which are mainly established to provide personal loans at low credit score. In this you may get a higher rate of interest but your personal loan will be approved easily. You can generally contact newly established NBFC banks. Another way is to apply for instant personal loans through apps.
Apply for a secured personal loan
There are some banks which can give you personal loans if you provide some collateral. One of them is ICICI bank (apply for a personal loan in ICICI Bank). It becomes less risky when you give some collateral against your personal loan. Using this way your loan can be approved easily. (apply for this).
How to maintain your credit score
First, you must know the affecting factors which lower your credit score. You can read affecting factors for reducing your credit score and improving your credit score.
It is tough to get a personal loan with a low credit score. And also if you get then also you shall get a higher rate of interest. So the best way to get a personal loan is to improve your credit score. We have given all tips and tricks on ‘how to increase your cibil score’. you can read that and can improve your credit score then apply for a personal loan. Of course, this is time and takes up to 4 to 6 months to increase your credit score.
Some tips in short to increase your cibil score are-
- Check your cibil report. Is there any issue or error? Complaint and remove that.
- Pay your EMI and credit card bills on time.
- Use less amount from your credit card. Less than 30% of the highest limit.
- Don’t apply for a loan at many places. It increases many inquiries.
If you need an urgent loan then apply now and after some time when your credit score becomes high apply for a balance transfer. In this way, you shall get a good rate of interest after some time.
Eligibility criteria to get Personal Loan with low credit score
There are some eligibility criteria to get a personal loan from any lender. Also, a credit score is considered after considering all these eligibility criteria.
Employee/Self-employed– You must have an income source. For this, you should have a job or any business. If you have any business then you are eligible for a business loan. You can apply for the best business loan offers.
Income- Before considering your loan they consider your income. This is the most important for your loan approval. Your salary or ITR shows your income. But maybe there is some side income so you can also give proof of that income and get your loan approval.
Income stability proof- you must have stable income proof. If you have a salary then it shows your job stability. If you have a business then it must take some time to start your business.
Documents required for personal loan for low credit score
- AADHAR CARD
- PAN CARD
- RENT AGREEMENT IF RENTED.
- IF NOT RENTED THEN ADDRESS PROOF (ELECTRICITY BILL).
- LAST 3-6 MONTHS SALARY SLIP (3 MONTHS TO 6 MONTHS VARY FROM BANK TO BANK).
- LAST 3-6 MONTHS BANKING (3 MONTHS TO 6 MONTHS VARY FROM BANK TO BANK).
- INCOME TAX RETURNS OR FORM 16.
These are some most essential documents required for a personal loan. You can know all the details knowledge about the required documents for a personal loan.
It is hard to get a personal loan with a low credit score. But everyone says nothing is impossible, so just you need to contact a lender to approve your loan. We are here to help you, you can contact us for more assistance. We have also given many tips to increase your credit score.
Frequently Asked Questions
What is the lowest cibil/credit score at which I can get a personal loan?
For different banks required credit score is different. Genera they need more than 650 cibil score. But if your cibil score is less than 650 you can get a personal loan but at higher rates.
Can I get a personal loan with a 500 cibil score?
It is very tough to get a personal loan with cibil score of 500. But still, you can get a personal loan with a high-interest rate if you have a good income. You can apply for app loans.
Where to apply for a personal loan if I have a low credit score?
You can apply to newly established NBFC banks or for app loans. Here you shall get a high rate of interest. The second and best way is to contact with loan agency like Crdtlin Capital. They shall choose the best options for you.
My credit score is still going down while I am paying on time. Why?
Maybe you are utilizing your credit card more or you have any settled loan or credit card. If you have not done anything like this then check your credit report. There may be an error.
Following theses given tips you can easily get personal loan with low cibil score in India.