Financial institutions check your CIBIL score (or credit score) to ascertain your creditworthiness before extending funds to you. So, a good score increases your eligibility for instant Loans. A score of 750 or above can also get you a more competitive Personal Loan interest rate. If your credit score falls below 700, then your chances of getting a Loan decreases and a lender may reject your loan application. But, there are certain things that you can do to improve your credit score and avail a Personal Loan like paying off existing debt, decreasing your credit utilisation ratio, and not applying for loans until you check and meet the eligibility criteria.
Most of the NBFCs offers Personal Loan of up to Rs.25 lakh at an affordable rate of interest. You simply need to meet the easy Personal Loan eligibility criteria and submit basic documents to avail a best Personal Loan. The best part is that you may have a pre-approved offer waiting for you, which speeds up the process.
Here is how you can avail the loan even if you have a bad credit score
- Apply with a Co-applicant: A friend, a family member, your business partner or a relative can be your co-applicant for a Personal Loan if you have a bad CIBIL score. However, in order to improve your chances of getting a sanction, you must ensure that your chosen co-applicant has a steady income and a good CIBIL score. Once the lender is satisfied with your co-applicant’s eligibility and credit score, it will be easy for you to get sanction on a high value loan on flexible loan terms. You must also understand that your co-applicant shares the repayment responsibility alongside you. So, ensure you can afford the loan and the EMIs before you take the loan to reduce your co-applicant’s obligation.
- Nominate a Guarantor: If you do not want someone to equally share the responsibility of repayment as a co-applicant on you loan application, you can nominate a guarantor to avail a decent sanction. Select a guarantor based on regular income, a good CIBIL score, and a healthy credit history. But, remember that when you default on repayment, it becomes the duty of your guarantor to clear your dues.
- Apply for a Secured Personal Loan: You can pledge any valuable asset like jewellery (gold), property, or shares to avail a Personal Loan. Taking a loan against collateral reduces the risk of default for the lender, and you will be able to access funds irrespective of a bad CIBIL score. Use a Personal Loan EMI calculator to prepare for your EMIs in advance for a stress-free borrowing experience.
- Improve your Credit Score First: If you can wait for some time before borrowing a Personal Loan, then you will have a chance to improve your credit score so that availing the loan becomes easier for you. There are different ways through which you can improve your credit health like paying your credit card bills on time, reducing your credit card use, paying your existing EMI regularly, or making part-prepayments on existing debts. You could also increase your income or stabilise your job before you apply for a Personal Loan. All this will boost your CIBIL score, and help you get a larger loan amount at attractive rates of interest.
So, if you have financial problems and a poor CIBIL score, you can deploy these tactics to avail a Personal Loan.