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| May 21, 2024

Instant Personal Loans for Low CIBIL Score: How to Get Approved

Lenders often first evaluate an applicant's CIBIL score when reviewing a personal loan application. Even without wage evidence or a pay stub, a high CIBIL score can meet eligibility requirements. Clearly, the CIBIL score is crucial for anyone seeking financial assistance. For personal loans, which are unsecured, the CIBIL score assesses a person's creditworthiness. However, obtaining an immediate loan without a CIBIL score is now possible, as more financial institutions offer new programs and deals to improve access to financial services.

What is the CIBIL Score?

A CIBIL check is conducted to determine an applicant's personal loan eligibility without collateral. The credit score, or CIBIL score, is a three-digit number that assesses an individual's or a company's creditworthiness. Managed by the Credit Information Bureau (India) Ltd, this rating helps lenders evaluate if a borrower can repay the loan in full and on time. CIBIL calculates this score using credit information from various banks and financial institutions. A borrower applying for a personal loan with no income proof may still be approved based on their CIBIL score. However, the question arises: Is it possible to get instant personal loan with a poor CIBIL score? So yes, continue to read to know how to get a personal loan with a low CIBIL score.

What Does a CIBIL Score Mean?

A CIBIL score below 750 is generally considered poor within the range of 300 to 900. Personal loans, being unsecured and without collateral, present a higher risk for lenders. However, a high credit score reflects a history of timely payments and establishes a person's reliability. This doesn't mean obtaining a loan is impossible without a good CIBIL score. Even with a low CIBIL score, or if you lack credit history and income documentation, you can still apply for a loan.

Suggested Read: Getting A Personal Loan Online With A 700 Credit Score

Improving CIBIL Score with a Low Credit Score and No Income Proof

The CIBIL score is dynamic and fluctuates based on an individual's latest credit report and debt repayment status. This means you can work on improving your credit score before applying for a loan. Consistent on-time payments of bills and EMIs over six months can significantly boost your credit score. Other factors that can improve your CIBIL score include having a diverse mix of loans, maintaining a low credit card utilisation rate, and keeping older credit accounts active. Once your score improves, you can apply for a personal loan based solely on your credit score, without needing to provide income proof.

Suggested Read: 9 Best Practices To Improve Your Credit Score

5 Ways to Obtain a Personal Loan with a Low CIBIL Score

Here is how to avail of an instant loan for a low CIBIL score: -

Proof of Sufficient Income to Maintain Timely EMI Payments

Demonstrating a steady and sufficient income stream can improve your chances of securing a personal loan approval, even with a low CIBIL score. If you have recently received a salary increment or have an additional source of revenue, highlighting these financial strengths can convince the lender of your ability to make timely EMI payments.

Apply for a Lower Loan Amount

Opting for a smaller personal loan amount when you have a low CIBIL score can work in your favour. By requesting a lower loan sum, you effectively minimise the risk exposure for the lender. This reduced risk level may increase the lender's willingness to approve your loan application, as a smaller amount is generally considered more manageable for repayment.

Secure a Guarantor or Apply with a Co-Applicant

Involving a co-applicant or having a guarantor with a decent CIBIL score can boost your eligibility for a low credit score personal loan. Their income and credibility will improve your chances of approval. But remember, your co-applicant will be held responsible for repaying the loan if you can't.

Check the Credit Report for Errors

Regularly review your credit report for errors related to identity, financial information, or repayments.

Improving these errors can improve your credit score, facilitating eligibility for a personal loan even without a CIBIL check.

Request the lender to take into account NA or NH on your credit report.

If your credit report indicates NA (not applicable) or NH (no history) because of limited credit activity in the past 36 months, engage with the lender. They might consider approving the loan with a slightly elevated interest rate.

While these measures can help you get an instant personal loan despite a poor CIBIL score, it's crucial to ensure that you have sufficient funds available for repayment. Failing to make timely payments will further deteriorate your credit score. To avoid such situations, you can utilise an EMI Calculator. This will enable you to plan your repayment strategy accordingly, ensuring you stay on track with your loan obligations.

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