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    Personal Loan for Low Cibil Score

    Personal Loan for Low CIBIL Score

    When you apply for a loan, the lender, lets say the bank, will need to know that you are worthy of receiving that loan. This worthiness has nothing to do with a charming personality, what it actually means is that banks need to know how good you are with your finances which tells them if you will repay the loan in a timely fashion and without missing payments.

    The way bank and other financial institutions can know your credit worthiness is through your CIBIL (Credit Information Bureau Limited) score. It a number that is associated with you and tells the bank how responsible you are with your loans and credit cards. The CIBIL score is one of the prime parameters used to determine the approval of a loan. The CIBIL score was Indias first ever credit rating system and is recognised by all the banks as an authority on an individuals credit rating.

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    How does CIBIL Score work?

    How the CIBIL score system works is similar to the credit score systems found in many countries. You are assigned a score, a number, between 300 and 900. The number that you get is a result of the information that the banks forward to CBIL. This information is a collection of your repayments of Personal Loans, home loans, vehicle loans and credit cards. If all your payments are made on time then you can hope to have a good score.

    If you skip payments or fail to pay the credit back in time, it could lower your credit rating which would, over time, would make it difficult for you to get approved for a loan. CIBIL is also going to include utility bill payments which means that your score could improve or deteriorate depending on when you pay your phone, electricity or water bills.

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    What factors lower CIBIL Score?

    Since CBIL scores are supposed to be an indicator of your financial habits, the score changes based on how you handle your loans and credit cards. These are some of the factors that can have a negative effect on your CIBIL score.

    • Personal loans

      Since personal loans are unsecured loans, taking too many personal loans can cause your credit score to fall.

    • Missing loan instalments

      If you miss an instalment on your loan then it may be viewed as poor financial planning which means that your credit rating will suffer making it difficult for you to secure loans in the future.

    • Coming too close to the limit on credit cards

      If you are too close to the limit of your credit cards too often, it too points at constant debt and an inability to manage money wisely leading to a reduction of your CIBIL score.

    • Not paying credit cards back on time

      Just like the EMI for your loans, if you fail to pay your credit card dues on time, they too can have a negative effect on your credit history.

    • Not paying credit cards in full

      You might think that paying just the minimum due on the card or slightly more than that is enough to keep things under control but it's not. While the banks may not be overly concerned that you have an outstanding balance, CBIL on the other hand takes it as a negative sign. For CIBIL, outstanding balance are not a good thing and tend to lower your scores.

    • Not having any credit at all

      It may sound like a good place to be in if you don't have any loans or credit cards at all when in fact it is not. This is so because not having a credit history means that your credit score is 0 by default which means that if you were to apply for a loan or a credit card, the chances of it getting reject are higher.

    • Too many rejected applications for loans/credit cards

      If you apply for a loan or a credit card and your application is rejected, you tend to apply with another bank, and another and so on. Such practices reduce your score for two reasons. The first is that CIBIL takes constant rejects to be a bad sign and secondly because every time a bank requests CIBIL for your credit information, your credit scores come down.

    • Settling credit cards

      If you have settled credit cards, that is, if you have negotiated with the bank and closed a credit card after paying an amount lesser than what was due on the card, then your credit history will receive a red flag that could cause trouble later.

    How CIBIL scores affect eligibility for loans

    While banks may not tell you what CIBIL score makes you a perfect candidate for a personal loan, they do say that your credit score will play a part in the approval of your application for a loan. If your score is below a certain number then chances are that you may not be approved for a loan.

    Even if you are approved, the interest rates offered to you may be higher than those offered to someone with a good score. While most banks in India may be vary of providing loans if credit scores are low, there are private finance companies that may offer personal loans for low CIBIL scores.

    What is a personal loan?

    A personal loan is a loan that you can take to cover any emergent expenses like unexpected bills or paying for things like an expensive vacation. The idea of the personal loan is to ensure that you have the funds you need in case of an emergency. The defining features of this loan are that it is unsecured and can be used for anything. Unlike vehicle and home loans, there is no restriction on what you do with the money you get.

    Features of personal loans

    There are lots of features that serve to make personal loans very attractive to people looking for quick and easy financing options.

    • Personal loans can be taken up to the tune of Rs. 30 lakhs and paid back over a period of 6 months to 5 years.
    • They require minimal documentation as compared to home loans or vehicle loans.
    • They also come with no restrictions on how you use the money from the loans.
    • A personal loan can be applied for, approved and dispersed in as little as 24 hours depending on the bank or NBFC (Non-Banking Financial Company) you approach.
    • They can be paid back via post-dated cheques, ECS or auto debit facilities provided by banks.
    • They also don't need for you to have any collateral to secure the loan.
    • You can go in for a prepayment and pay the loan back before its tenure is over however, prepayments may attract a fee.
    Interest rates for personal loans

    Unlike other loans, personal loans tend to be a bit more expensive since the interest rates charged on such loans are higher. Just like with any other loan, the specific interest rates for these loans will differ from one bank to another. The general range of the interest rate can be from 15% per annum to as high as 20% per annum depending on the bank.

    Eligibility criteria for personal loans

    Since these loans are only available to individuals they come with certain eligibility criteria which are:

    • You must be between the ages of 21 years and 60 years in order to apply for these loans. In the case of some banks the minimum and maximum ages might differ based on the bank's own rules.
    • You will also need to have a minimum specified net monthly income. This too changes from bank to bank and may also be affected by the city that you live in.
    • Some banks also have rules regarding the EMI which state that the ratio of your net monthly income and the EMI should not be greater than 50.
    • The loan is also available only to salaried or self-employed people.
    • With some banks you may be asked to provide a guarantor for the loan.
    Documents required

    Since personal loans are meant to be easy to acquire, the documentation for them is quite simple and includes the following documents.

    • Identity proof in the form of an aadhar card, driver's license, passports, etc.
    • You may also need to provide an address proof like a driver's licence, electricity or telephone bills. In the case of a driver's license which has your current address mentioned on it, you may be able submit that as both ID and address proof.
    • You might also have to submit your payslips as proof of income.

    How to improve your CIBIL score

    If you happen to have a CIBIL score that is not good then there is no reason to lose heart. There are things you can do to improve that score. Here are some tips that can help you improve your credit rating.

    • If you have credit cards with outstanding balances then you need to pay them back at the earliest possible because even if you pay the minimum due, it only gets the bank off you back, the remaining is still considered outstanding by CIBIL.
    • If your credit score is not good then try to keep the borrowing down to a minimum. Doing this will give you time to recover from your current debt without creating new debt.
    • Let's assume that you have cleared all your debt and decide that to celebrate your freedom from debt you will cancel all your credit cards, DON'T! If you cancel all your cards then you won't be able to create a credit history when you need one at a later stage.
    • If you don't have cards or loans that can help you create a credit history to get your score going, you can always go in for a Secured Loan like a vehicle loan. Sure you may not get the best interest rate on such a loan but at least you may get a loan that can help you jump start your credit history.
    • There are times when you move into a house and realise that because of the misdeeds of the person who stayed there before you, the address has been blacklisted. What you can do in this case is to inform CIBIL of the mistake and get it corrected.
    • As far as using your credit cards are concerned, make sure you don't come close to the limits of your cards too often. If you do then your score might deteriorate further.
    • In case you can't get a loan or a credit card to get the history going what you can do is to approach banks that provide credit cards against fixed deposits. The idea is that you open an FD with them and they will issue you a credit card that has a limit slightly lesser than your FD amount. This will get you into the credit system and get your credit history going.
    • In time, even utility bill payments are going to affect your CIBIL score so it's best to make a habit of making sure that ALL your bills are paid in full and on time.
    • If you are rejected for a loan or credit card once, don't keep applying for one at other banks. Take some time out to fix your score and then apply again.

    It may not be easy but it is possible to get a loan even if you have a poor credit history. All you have to do is to shop around a bit and talk to multiple banks about the possibility of extending you a personal loan with your CIBIL score. Just make sure that if you do get the loan, you pay it back on time and without any hassles so that your credit score doesn't take too many hits.

    Personal Loan for Low Cibil Score Reviews

    • ICICI Bank Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have taken my personal loan from ICICI bank, i am satisfied with my loan amount which they have provided to me and even they charge nominal rate of interest and even processing fee which they charge was normal, i did not found any difficulty in getting my loan approval it run very smoothly.
      Was this review helpful? 0
      , bangalore
      Reviewed on Oct 16, 2018
    • SBI Personal Loan
      "GOOD"
      0.5 5.0/5 "Blown Away!"
      My personal loan was taken from the STATE BANK OF INDIA and it got approved very quick also the process of getting the loan is is easy and good. I have got the sufficient amount of personal loan. The service is good and responsive also added on that it is good to use.
      Was this review helpful? 2
      , chennai
      Reviewed on Oct 15, 2018
    • Bank Bazaar Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I know bankbazaar.com from last 6 months but i am using the service from last 5-6 months. Customer service is good with bankbazaar and their response was on time.Both mobile app and the website of bankbazaar is easy to use and is user friendly.
      Was this review helpful? 1
      , noida
      Reviewed on Oct 15, 2018
    • IndusInd Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      My personal loan application was approved with IndusInd bank and the experience was good, the process was quick and i received my credit card within 2-3 days. The loan amount was for Rs 2 lacs with nominal interest rate when compared to others. Customer service was good and they responded on time.
      Was this review helpful? 1
      , noida
      Reviewed on Oct 15, 2018
    • Bajaj Finserv Personal Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      The process in getting this loan has been smooth and easy and the loan amount which they had provided had been satisfactory. They had been charged me with some processing fee but there has not been any sort of additional charges. The interest rate which they offered also had been good where it was comparatively less.
      Was this review helpful? 1
      , bangalore
      Reviewed on Oct 15, 2018
    • Capital First Personal Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      It has been a good experience in getting this loan from them. The loan amount which they had provided had been satisfactory and the interest rate with them has also been good when compared with the market rate, there has been some processing fee which has been charged by them but it has been nominal. Overall it was a good experience.
      Was this review helpful? 1
      , bangalore
      Reviewed on Oct 15, 2018
    • ICICI Bank Personal Loan
      "Best Financial Service"
      0.5 5.0/5 "Blown Away!"
      I have taken personal loan from Icici bank , Am satisfied with the rate of interest of 10.99% which is low where no other bank will give for such low interest with nominal processing fees. They instantly approved .Their customer executive used to call for the offers if any offers goes around.
      Was this review helpful? 1
      , coimbatore
      Reviewed on Oct 15, 2018
    • Axis Bank Personal Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      Applied a personal loan with AXIS bank, i was in a urgent need and my application was processed in a week time. I find the interest rates very high here The sales person didn't gave me any idea on interest rates, as i was needed money for a medical urgency i didn't inquired for interest rate. But now its been 3 months and i feel like its very high.Have taken amount of 3 laks, would wish if the rates come down, it will be a great relief.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Oct 15, 2018
    • Fullerton Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I had taken my personal loan fom Fullerton India and it has a good experience i had with them . i am satisfied with loan amount which they have given to m and even i am happy with tenure period as well,they rate of interest and the processing fee is nominal they have charge me.
      Was this review helpful? 1
      , kolkata
      Reviewed on Oct 15, 2018
    • Axis Bank Personal Loan
      "Best Financial Service"
      0.5 5.0/5 "Blown Away!"
      I have taken personal loan from Axis bank . Am satisfied with the rate of interest which they have provided which is promising one . There is processing fees for the loan and pre closure charges are there . I make the payments through Ecs every month .Its been approved in 7 minutes.
      Was this review helpful? 1
      , coimbatore
      Reviewed on Oct 15, 2018
    • HDFC Bank Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      I have taken my personal loan with HDFC BANK my exoerience was excellent with his bank there rate of interest and there processing fee is nominal and even they gave me good tenure period as i want and they don't take any hidden charges with interest rate. even support team response well.
      Was this review helpful? 2
      , chennai
      Reviewed on Oct 15, 2018
    • ICICI Bank Personal Loan
      "AVERAGE"
      0.5 3.0/5 "Satisfactory"
      I have been applied for the personal loan with the ICICI BANK personal loan and the process of getting the loan is quick and good. The customer support is not responsive added on that they are not responding properly. The loan amount was sufficient but the rate of interest is higher.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Oct 15, 2018
    • Standard Chartered Bank Personal Loan
      "Good in all"
      0.5 5.0/5 "Blown Away!"
      Standard Chartered Bank is also good in the process for the personal loan. The customer support and response is good and there are no hassles to get the loan. The rate of interest and processing charges is normal. The after loan services is good.
      Was this review helpful? 1
      , chennai
      Reviewed on Oct 13, 2018
    • Kotak Personal Loan
      "Nice process overall"
      0.5 5.0/5 "Blown Away!"
      I bank with Kotak Mahindra Bank for the personal loan. I have taken a loan of 50K and the process to get the loan is fine. The rate of interest and processing charges is normal too. There are no hassles after the loan was processed too. Good overall.
      Was this review helpful? 1
      , mumbai
      Reviewed on Oct 13, 2018
    • Fullerton Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I had taken this loan a long time back and it has been a good experience i had with them. The loan amount which they had provided had been satisfactory and there has not been any additional charges which they had with them. The interest rate with them also had been nominal as well and their customer support also had been good as well.
      Was this review helpful? 3
      , chennai
      Reviewed on Oct 12, 2018
    • Kotak Personal Loan
      "In all good"
      0.5 4.0/5 "Great!"
      Kotak Mahindra Bank is pretty good in the personal loan services. The customer support is fine and they are very quick to collect the paper work and process the loan. The rate of interest and processing charges are on the higher side though. In all good.
      Was this review helpful? 4
      , bangalore
      Reviewed on Oct 12, 2018
    • HDB Financial Services Personal Loan
      "Good. Can do better in ROI"
      0.5 4.0/5 "Great!"
      My process with HDB financial services is good. They are very fast in the process to get the persona loan. The customer support and response is good. The rate of interest and processing charges is not satisfactory. It is very pretty high when compared.
      Was this review helpful? 4
      , bangalore
      Reviewed on Oct 12, 2018
    • Central Bank of India Personal Loan
      "Process is too slow"
      0.5 2.5/5 "Just OK"
      The good thing about the personal loan with Central Bank of India is, they offer a very good rate of interest and processing charges, when compared to the other banks. The loan is provided as per my request too. But the major drawback is they take a very long time to process the loan request.
      Was this review helpful? 4
      , bangalore
      Reviewed on Oct 12, 2018
    • Citibank Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It was completely a good experience i had with them with this personal loan where the loan amount which they had provided had been satisfactory. The interest rate with them has been nominal and there has not been any sort of additional charges which had been made by them. Even their customer support had been helpful as well.
      Was this review helpful? 3
      , pune
      Reviewed on Oct 12, 2018
    • ICICI Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      To get a personal loan from them it has been smooth and easy and the loan amount which they had provided had fulfilled my requirements. There has been some nominal charges which had been made by them and the processing fee also had been nominal. Their customer support also had been responsive as well where they had been helpful during the process.
      Was this review helpful? 4
      , pune
      Reviewed on Oct 12, 2018
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