Low CIBIL Score: Useful Tips To Get Loan When Credit Score Is Low

CIBIL score plays an important part in getting approval for a loan from banks or NBFCs. The three-digit CIBIL Score, which goes from 300 to 900, is a numerical summary of your credit history, report, and rating. Your credit rating is higher the closer it is to 900. A higher rating means a clean credit history which in turns makes your candidature easier for loans. But sometimes due to unavoidable circumstances you may miss paying EMIs on time or default on debt which hits your credit history resulting in a lower than desired CIBIL score. Banks refuse to give loans to those whose credit score is below a certain limit. Here, if we talk about CIBIL Score, a score of 750 or above is considered better. Those with CIBIL score less than 700 may face difficulty in taking a personal loan. People whose CIBIL score is less than 700 and want to take a loan from the bank can follow some tips. You can try these tips to improve your chances of getting a loan. 

Check flaw in CIBIL Score or Credit Score

Before applying for a loan, you should check your credit report first. Many times the credit report may not be updated or there may be some wrong entries in it. If you notice any such defect then get it rectified before taking the loan. 

Assure the lender about your ability to repay the loan

If there are any deficiencies in your credit report that you cannot get corrected, you can assure the lender that you have the ability to repay the loan. Credit reports do not contain details of your salary, your savings or your net worth. In such a situation, it is possible that the lender may agree to give you a loan at a slightly higher interest rate.

Apply for joint loan

If your CIBIL score is low then you can apply for a joint loan with your father, brother, sister or spouse. The person with whom you are going to jointly apply for the loan should have a high CIBIL score. In such cases, lenders can impose loan sanction after assessing the ability to repay the loan.

Apply for small amount loan

If the above mentioned tips are not working then another way is to apply for a loan of small amount. If your credit score is low, the lender may doubt your ability to repay a large loan EMI. If the loan amount is less then you can convince the bank to repay it.

Loan from NBFC or Fintech companies

You should use this solution last. Many non-banking financial companies (NBFCs) and new age fintech companies can approve your loan despite low credit score/low CIBIL score. However, their interest rates may be higher than those of banks.