When you apply for a personal loan, one of the factors they take into account before sanctioning your loan is your CIBIL score. Your CIBIL score must be 750 and above in order for your loan to be approved.
Despite a lower CIBIL score, the lender may approve your loan except that they may levy a higher rate of interest on your loan amount. We will have a look at some of the ways through which you can avail a personal loan despite having a low CIBIL score.
When do you need to avail a personal loan without CIBIL verification:
- Low CIBIL Score
- No CIBIL Score
Tips that you must follow in order to avail a personal loan despite having a low or no CIBIL score
- Prove that your income is enough to repay the loan: Despite a low credit score or having no credit score, you can still avail a personal loan of your choice provided that you can prove it to the lender that your income is sufficient to repay the loan on time.
- Ask for a lower loan amount: Higher the loan amount, higher will be the interest rate charged on it. If you have a low CIBIL score and ask for a higher loan amount, then the lender may not be willing to sanction your loan since they may doubt your ability to repay such a huge amount on time. Hence, always go for a lower personal loan amount since the rate of interest charged will be low.
- Correct mistakes in your credit score: You must go through your credit score from time to time. Sometimes, there can be mistakes such as wrong name, or probably the latest information hasn’t been updated which can severely affect your overall credit score. Hence, always check your credit score and correct the mistakes, if any. This will help your credit score to improve and it will be easier for you to avail a personal loan of your choice.
- Apply with a co-applicant: If you want to apply for a personal loan, but have a low credit score, you can up your chances of approval by applying for the loan with a co-applicant or a guarantor. It is important that your co-applicant is preferably one of your family members who should be informed beforehand regarding your intentions to avail a personal loan. The applicant will have to complete the KYC process. The lenders will check whether the co-applicant has a steady income and will be able to repay the loan on time. They are most likely to approve your loan if the applicant meets the criteria.
- Ask the lender to mark NA or NH in your credit report: The NA or NH on your credit report marks absence of any previous credit activity or absence of credit in the last 36 months. In such a case, you may not have a credit score in your CIBIL report. So, you can try and speak to your lender regarding your credit inactivity. It is likely that the lender will offer you this loan at a slightly high rate of interest.
- Collateral based loans: You can opt for collateral based personal loans where you will have to pledge collaterals such as shares, assets, gold, FDs, etc. In these cases, you are not required to show your CIBIL score and it is much easier to avail a personal loan of your choice from a lender.
Hence, these are some of the points that you will have to keep in mind in order to avail a personal loan despite having a low or no CIBIL score.