While evaluating a loan application, lenders look at the CIBIL score, which is an essential factor. But it's necessary to know about CIBIL score and how it is calculated before having any loan.
What is CIBIL score?
CIBIL score is a 3 digit numeric summary of your credit history. Credit history is derived by using details from the accounts and inquiries sections of your CIBIL report. The payment status of your loan account and credit cards, as well as the outstanding amount's days past due, plays a significant role in your CIBIL score. The CIBIL score reflects your worthiness towards your repayment of the amount that you share. The range of the CIBIL score is 300 to 900. So, people who have a higher score get a better chance of getting a loan approved. Different loans have different criteria's and 79% of loans are sanctioned to consumers with a CIBIL score greater than 750. It's crucial to maintain the CIBIL score as this can also work in the future for having any other loan.
How to get a personal loan with a low CIBIL score?
1. Figure out errors in your credit report: Due to any reasons, there may be misreporting or errors on your credit report so, resolve all the errors in your credit report. This happens because your report hasn't been updated. This is not considered your fault, so immediately report to the concerned authority and resolve it soon. This will increase your credit score and make you eligible for a personal loan.
2. Go for a low personal loan amount: With the low CIBIL score, your lender finds you at high risk when you ask for a huge amount in the personal loan. But if the loan amount is low, then chances are more that the lender will be inclined to grant you the personal loan. Not only can you get it as compared to the higher amount, but it will be easy for you to repay the lower amount. As you are the defaulter in the lender's point of view, always make it easy for you and the lender to have a personal loan with a low CIBIL score.
3. Evidence of income: For making the lender more favorable to your loan application, you can show proof of your income. If you are going through a low CIBIL score but with a hike in salary and additional income sources, then proof of your salary can work. The lender considers your loan application if you show shreds of evidence like you have a secured job and a steady income. By these shreds of evidence, the chances of getting a loan, but note that you may be subjected to a higher interest rate.
4. Getting a guarantor or a joint loan: Whenever you want the personal loan, but you know that your low CIBIL score doesn't allow this you to do, then get a co-applicant or guarantor. But the guarantor should be with a good CIBIL score. Your co-applicant or the guarantor permits to ensure that the KYC formalities are completed with the necessary signatures on the required forms. So, having a guarantor with a good CIBIL score can help you get a personal loan even with a low CIBIL score.