There are many situations in life when you are in urgent need of money and you will have considered taking a loan. Be it urgent medical expenses or an emergency in the family the best option which you will consider is to go for a personal loan.
Now imagine you are stuck in such kind of a situation and you try to opt for a personal loan. You make the necessary documentation arrangement and apply for a loan, you get a call from the banker stating your loan is been denied. Now you are in a mess and trying to figure out what exactly went wrong and why your loan was denied. You later come to know that you have a CIBIL scoreof 550.
If Your Credit Score Is:
This Is How You Fare:
800 or above
Excellent score. You will be a preferred customer for the lenders
720 to 800
Good score. Lenders will look at your application favorably
680 to 720
Fair score. Unnsecured loans are likely to be priced higher for the risk involved
Less Than 680
Poor. No unsecured credit facility is likely to be provided by any prime lender
As is evident from the above table, you need a CIBIL score above 680 to get a personal loan(among other factors). Now What would you do in such kind of a situation? Will you try getting a loan from other bank? What if they give you the same answer?
You can get a personal loan with a cibil score of 550! Yes, you saw that right. The terms and conditions to opt for such loans are a bit steep but you can get your loan sanctioned even with a bad credit. Before we get into it, let us understand what a bad CIBIL score is anyways. What exactly is a bad credit score for a personal loan? Different credit bureaus have different system to rate on the credit score. The most common number is 550 which are taken to be a bad CIBIL score and if you are near 680 as a credit score you may still hope to get a personal loan. This completely depends on the discretion of the lender if they want to fund a loan. They may pull up your records on how many accounts were in debts in the past, etc and then figure out if you are credit worthy. Here are some tips to get a loan with less credit score
1. Start with rebuilding your score As mentioned earlier, you may hope to get a personal loan sanctioned even if you are close to 680 as a score. It will be worth a shot if you can work on it and wait till your credit score reaches close to 680. This score will still be below average, but you can get your loan sanctioned with higher interest rates. You can check with the credit bureaus if there are any mistakes in your report which is pulling your score down.
2. Get finance quotes from your existing bank : If you cannot wait until your score going up and you are in urgent need of funds, try making a list of lenders who are ready to finance you despite of having a bad credit. One tip here is check with your home bank if there are any pre-approved loans available for you. In pre-approved cases the lender does ask for documentation and the amount gets credited into your bank account without further checks.
3. Seek family and friends help :This is one of the easiest ways to get out of a difficult situation. You can always seek help from your family and friends for urgent funds which you can repay later. This is anytime better than going for a loan and getting denied because of bad CIBIL score. you will have space to repay the amount to your relatives at the same time you can improve CIBIL score.
4. Get a secured loan : This can be the most last resort if you want urgent funds and you have nowhere to go. The lenders will be happy to provide you secured loan by keeping something in return as collateral. Collateral can be a property, car, gold, etc. If you have a realization that somehow you have messed up your credit score, start fixing it from today. This practice can help you in the long loan run.
5. Try for a guarantor based loan : This is useful if you are able to find a friend/family meber who is willing to vouch for you and stand guarantee for your repayment on the personal loan. For more on personal loans with guarantors, click this link
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