The Buyt Desk
CIBIL score is the indicator of credit history. A good CIBIL score, i.e., above 700, indicates that the individual had repaid the borrowed loan to the bank responsibly and thus has a good credit history. A low score, i.e., below 700, reflects that the individual has not returned the borrowed money responsibly and has a bad credit history. Financial institutions and non-banking bodies use the CIBIL score to find the credit history of loan applicants. Based on the findings, they decide whether to process a loan application or drop it.
How to get a loan application approved with a low CIBIL score
All banking and non-banking institutions process loan requests after checking the CIBIL score. The likelihood of getting a loan approved with a low CIBIL score remains the least. But what if you need a loan for an emergency? Or what if you are a person having no credit score? How would you get the loan? Well! There are ways present to get a loan in these scenarios too.
Apply with a Co-applicant – Add a co-applicant to the loan application. The co-application could be your spouse or parents with good credit history. It will reduce the credit risk as the co-applicant becomes equally responsible for the loan repayment.
Apply at Fintech Lender – A rejected loan application at a bank further downgrades the CIBIL score. So, do not directly go to the bank until you are sure of getting your loan application approved. The non-banking financial company is another door you can knock on to seek a loan. They have a relaxed policy for loan approval than banks, and they also consider the application of individuals with a low CIBIL score. However, for this facility, they charge a higher interest rate in comparison to banks.
Request For Small Loan – Banks don’t want to risk their money by giving a loan to people with poor CIBIL score. Thus, being hopeful for getting a higher loan request approved is wrong. If it is not an emergency, request smaller loans, and repay the amount as per policy. It will strengthen your score and make you eligible for bigger loans in the future. If your credit score is not extremely low, the loan request might get approved for a lower amount.
Opt For Secured Loan – Secured loan is when you put something on the mortgage. It is also called a mortgage-backed loan. Examples of this are gold loans, loans against property, etc. For such loans, lenders do not consider CIBIL scores as they have the security to recover their money. These loans also help to improve the credit score, provided the applicant repays the amount according to the policy terms.
Get a Guarantor – The guarantor is like having a co-applicant, but the person could be outside of blood relation. If the guarantor has a good CIBIL score, banks often approve the loan application as the responsibility of repaying the loan lies on the guarantor too.
