Periodically checking your CIBIL score is crucial for maintaining good credit health. CIBIL score is one of the major factors that impact your eligibility for availing financing, including personal loans. Having a strong score of 750 and above can make you an eligible candidate for an affordable personal loan offer. On the contrary, a low CIBIL score may make it challenging for you to get loan approval at favourable terms and conditions. However, getting approval with a low CIBIL score for a personal loan is not impossible if you follow certain tips.
Four tips to avail a personal loan with a low CIBIL score
- Opt for a low loan amount
Usually, lenders hesitate to approve personal loan applications if you have a low score as it indicates poor credit history and incapability to meet Equated Monthly Instalments (EMIs) on time. When you have a low credit score, applying for a low loan amount may work in your favour. This is because a low loan amount reduces the lender’s risk, which indirectly boosts your loan approval chances. To know the loan amount you should apply for as per your repayment capacity and eligibility, you can use a personal loan EMI calculator.
- Apply with a guarantor or co-applicant
As low CIBIL scores indicate a higher default chance and an enhanced credit risk for lenders, applying with a joint applicant can help. Adding a guarantor or co-applicant shifts the liability of your loan repayments on them if you default on the personal loan. Owing to this reason, the lender’s risk reduces, which makes them less hesitant to approve your personal loan application despite a low credit score. However, keep in mind that your co-applicant must have a high income and a good CIBIL score.
- Show all your sources of income
Your monthly income directly indicates your repayment potential. Usually, a high income with lesser monthly obligations indicates that you have the required funds to meet your EMI payments. As a result, lenders might approve your application even if you hold a low CIBIL score. However, before you hit on the personal loan apply button on the lender’s site, ensure you have a reliable and steady income source. Besides your salary, you may also earn from other sources such as freelance work, rental properties, investments, and more.
- Check if your credit report is up to date
Sometimes, the details in your credit report may not be up to date or there may be incorrect details in your report that may result in a lower credit score. In such cases, you must instantly report the discrepancies to the concerned authorities for correction. Rectifying such mistakes can increase your CIBIL score.
Once you apply these tips, make sure to compare loan offers by different lenders so that you can get a good personal loan interest rate. Also, while you can get a personal loan despite a low credit score, work on improving your credit score over time as it will help you when applying for other loans in future.