How to Get a Personal Loan on Low CIBIL (credit) Score?
Retail loans experienced a growth of 7.3% between January and June 2019. Personal loans are an important component of total retails credits, as it is a popular choice among individuals looking for immediate unsecured credits with no end-use restrictions.
Financial institutions often consider the credit score of an applicant before sanctioning such funds, as it reflects their respective creditworthiness.
To increase their chances of availing such advances, borrowers can look into how to get a personal loan on a low credit score for hassle-free approval and disbursal process.
Having sufficient knowledge regarding the same reduces the odds of rejection of an application.
How to get a personal loan with a low CIBIL score?
Individuals having a history of default/s and thus a below-par credit score, or first-time applicants having no score should go through the following pointers to facilitate the loan approval process –
- Opt for a personal loan with a co-applicant
Co-applicants bear equal weightage in the loan approval process as he/she assumes equal responsibility in the loan repayment process.
Also, financer’s considered the income or the repayment capability of the co-applicant as well for approval.
Thus, individuals applying for a personal loan with low CIBIL score can do so successfully with a co-applicant who has a healthy credit score. It is worth mentioning a co-applicant can help avail a higher loan amount.
- List a guarantor
A guarantor overtakes the repayment liability in case borrowers are unable to meet the stipulated EMI payments.
While financers consider a CIBIL score around or above 750 as prospective for personal loans, listing a credible guarantor increases the chances of approval of the personal loan for low credit score.
Note that the income of a guarantor is analyzed in such cases too, just as that of a co-applicant.
However the same has no bearing on the loan amount offered to the borrower in the first place.
- Have a low FOIR
Fixed obligation to income ratio (FOIR) indicates the repayment capability of borrowers, through unobligated funds available.
Such ratio demonstrates the proportion of money spent on necessary expenses such as rent, electricity, food, etc. as a percentage of total income.
A low FOIR indicates that surplus funds are available with individuals, which can be utilized to meet EMI obligations.
As a result, a personal loan with a low CIBIL score may even be approved based on simply the FOIR considering that the borrower has enough residual income available to make the necessary EMI payments.
- Pay higher interest rates
A personal loan is often associated with a high-interest burden in case an applicant holds a poor credit score.
Such high-interest rates are levied to mitigate the risks of lending institutions.
A prospective borrower with a below-par will automatically be offered with higher interest rates.
However, is important for borrowers to note higher interest rates increase the EMI liability of individuals.
It is advisable for borrowers availing a personal loan for low CIBIL score to use an EMI calculator to best plan their finances accordingly.
Several financial institutions such as Bajaj Finserv often extend such Personal Loans at competitive interest rates and with numerous repayment-friendly features.
They also provide pre-approved personal loan offers on such advances, making the loan approval process instantaneous and hassle-free.
Pre-approved offers are available on several other financial products, such as home loans, personal loans, business loans, professional loans, etc.
You can check out your pre-approved offer by providing just your name and phone number.
- Check eligible loan value
Applicants having a low credit score are eligible to apply for a personal loan, however for a curtailed loan amount.
You can increase your chances of approval if you apply for a loan amount even lower than the eligible amount.
After availing such credits, borrowers ensuring timely repayment of all EMI liabilities are bound to increase their credit score, which, in turn, raises the chances of faster approval of such advances at a nominal cost of borrowing in the future.
A personal loan on a low CIBIL score, thereby, can be successfully availed to meet all urgent financial needs.
You would do well to consider these above-mentioned pointers before applying for one.
Category: Loans
