Struggling with low cibil Score ? Loans for low cibil score

loans for low cibil score
Loans for low cibil score

loans for low credit score

Cibil score is a very important metric for approval of all kinds of loans in India. Low cibil score is big issue and low credit score is a hinderance in approval of any kind of loan.

When we talk about loans.

There are three types of Loans.

1. Secured Loans

Mortgage loans, loan against property, Housing loans and auto loans come under the category of secured loans as they are backed by some type of physical assets. Basically, a secured loan need borrowers to offer collateral, while an unsecured loan does not. This difference affects your interest rate, borrowing limit, and repayment terms.

2. Unsecured Loans

Personal loans, business loans and credit cards come under unsecured loans as there is no asset that is given as security.Secured loans are not just for new purchases. We call Secured loans as home equity loans/home equity lines of credit. These are based on the current value of your home loans or home equity home minus the amount still owed. Such loans use your home as collateral.

3. Consumer Loans

Now lets us talk about a hybrid kind of loans, which are a mix of both the categories i.e. Gold loans, loan against securities and credit cards against Fixed deposits. Overdraft facility is also a mix of loans, as this is only a temporary liability. Banks approve these loans even in case of low credit score.

Can you challenge a default due to cheque bounce?

You can very well challenge the default case arising due to cheque bounce or any unwanted credit crunch arises because of situations created by natural events/disasters. You should consult Single debt for legal help on these type of issues.

Good cibil Score is Important for a Personal Loan

A personal loan is an unsecured loan that does not require the customer to pledge any kind of collateral. Banks/Financial institutions sanction loan after scrutinizing the CIBIL score of the customer. This is where the credit history of the borrower plays its part. TransUnion CIBIL Ltd also referred to as the Credit Bureau of India is an RBI licensed company that maintains records of loans and credit cards.

A CIBIL credit score for a loan is a 3-digit number ranging from 300 to 900 that speaks for the credit history of the customer. The higher your CIBIL score, the better are your chances of loan approval. Also, the sanctioned loan amount depends on how good your CIBIL score is. Read more to know about the ways to get a personal loan for a low CIBIL score.

Minimum credit Score for approval of a Personal Loan

CIBIL score required for a personal loan is usually 750 or above. The credit score for a personal loan plays a vital role in determining your eligibility. It also helps lenders in assessing the permissible limit of the amount which they can sanction as your loan (apart from other eligibility criteria). However, achieving an ideal credit score is not a big deal, but still you should follow certain rules to keep your credit history neat and clean.

Read How to improve your credit score

Loan for low credit Score

For those who do not have an eligible CIBIL score, there are certain things that can be done in order to get loan approval and/or improve creditworthiness.

  • Regular Income earning job/business: If you have a good, regular income, then there are chances of getting a loan approval. However, please note, your loan approval depends on a multitude of factors, including type of job, employed, income and credit score.
  • Paying Taxes: Regular payment of taxes gives a good impression of the applicant’s profile.
  • Bank Balance and good investment portfolio: A good bank balance reflects one’s capability to repay the loan which certainly increases the chances of getting a loan. If you have enough Mutual Funds and Stocks in your investment portfolio, you can easily take loans against securities.
  • Guarantor / Co-applicant: You can ask a family member with a good CIBIL score to be the guarantor or co-applicant for your loan.
  • Repay Your Debts on Time: Repayment of all your EMIs on due dates and credit card bills can help you build towards a good CIBIL score. It is better to pay all your EMIs through ECS mode, so that you will pay your EMIs on time.
  • Reduce the Loan Amount: You should always take a loan lesser than the approved limit. For example, your annual salary is 10 lakhs and according to that you can get a personal loan up to 2-3 lakh. So you should avail personal loan lesser than your lower limit, that is 2 lakh. This will improve your credit score in the coming future.

Boost your Credit score with a deposit/collateral based loan

This is a quite tricky idea to improve your credit score immediately. As you are already struggling with a low credit score, So you will not get any secured or partial secured loans. Then what to do?

In this situation, try this.

You should take a credit card against fixed deposit (small limit) in a nationalized bank. By this way, you can easily get a credit card.

Now you should keep following two things in mind.

  • You should use the 20% – 30% limit of this credit card for next three months.
  • Keep using this card in low utilisation mode for these three months.
  • Pay your full credit card bill in time.

This is a rapid way to boost your credit score in one month.

Still there are various online loan providing websites which are providing loans to the individuals having low credit score

If still you are not getting a loan, then get a customised loan with comfortable interest rates. Don’t forget to mention your current credit score

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