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How to Get a Personal Loan When You Have a Bad CIBIL Score

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A personal loan is accessible to anyone. But, if you have a bad CIBIL score, it may become difficult to get one. Lenders access your ability to repay back your loan by checking your credit score. Getting a personal loan when you have a bad CIBIL score is however POSSIBLE!
First, you need to understand what a CIBIL score is.

What is a CIBIL score and why is it important?

CIBIL score is a measure of your credit-worthiness determined by the Credit Information Bureau Limited. It shows how reliable you are in terms of managing your credit card or loans. 

Since a personal loan is an unsecured loan, lenders check CIBIL score of the borrower in order to determine the risk associated with the repayment of the loan amount. A good CIBIL score determines low risk and high chances of getting the repayment back, considering the good credit history and you being financially responsible in the past.

Reasons for a bad CIBIL score - 

  • Defaulting on loan payments
  • No/bad credit history
  • Multiple unsecured loans but bad financial management
  • Late payments on EMI’s, credit card dues and loans
  • Very high usage of credit limits
  • Paying lower than the said due amount and clearing credit card debt
  • Multiple rejected request of credit cards/loans

Coming to the point of getting a personal loan with a bad CIBIL score, it is possible. Read below the factors you should consider for availing them.

Ways to get a personal loan with a bad CIBIL score

A poor credit score symbolised by your low CIBIL score may provide it as a challenge to get a personal loan. However, it is not impossible. Below are the methods through which you can avail a personal loan with a bad CIBIL score. 

1 - Provide an income proof which can support repayments

If you have a bad CIBIL score, providing proof of a stable income can help you get a personal loan. If you have any increase in your salary or have an additional source of income, even then your application can be considered if your CIBIL score is low. If you can build a conversation with a lender and provide them with the proof of your steady job and income, the lender would mostly grant you the personal loan. Although, the interest rate for the same may be higher in this case.

2 - Get a co-signer

Getting a guarantor or co-applicant for your loan is an effective way of getting a personal loan with a bad CIBIL score. A co-guarantor serves as a person who will repay your loans in case you fail to make the payments. He/She must have a good CIBIL score in order to prove creditworthiness and that the person can make on-timely payments. If your co-applicant has a steady income as well, the lender will more likely provide you with a loan. 
You should ask your co-applicant beforehand since they would have to provide the signatures of KYC documents.

3 - Ask for a low principal amount

Huge loan amounts may amount to a greater risk in terms of repayment. For a lender, it is an indication that you may default on your loan due to large loan amounts. Hence, if you apply for a personal loan with a smaller amount, the lender would be more comfortable in granting you the same since it offers faster repayment due to a lesser loan amount.

4 - Check for mistakes in your credit report

Always make sure that your recent information regarding your credit or loans has been updated. A failure in the same can result in showing errors in your credit report. This can lead to getting a bad CIBIL score even when it’s not your fault. So it’s recommended to check your credit report and fix the errors if any. It can help increase your credit score and help you get a personal loan.

5 - Look for employee-company tie-ups

 Many firms have tie-ups with banks and other financial institutions. If you’re working for one such company, you may get employee benefits and other banking facilities.

6 - Get an NA/NH consideration in your credit report

You can request your lender to mark NA or NH on your credit report which indicates an absence of any credit history or activity in the past 36 months. It would then indicate that there will be no credit score in your report. Hence, there will be credit inactivity, if your lender approves.
You can get a loan via this, however, the interest rate offered for this loan will be higher.

7 - Look for lenders offering loans for bad CIBIL score

With the availability of fin-tech platforms and non-bank financial institutions (NBFC’s), getting a personal loan has become easier. It may look like a challenge but several lenders such as Nitstone Finserve offer personal loans for bad CIBIL score even when the score is lower than 700. 

It may come with a higher interest rate as already mentioned, but it would still cater to your need. You must shop for loans and manage your payments regularly in order to avoid further hassle. 

8 -  Get alternative loans

If you still can’t find any way of getting a personal loan, go for these options mentioned below.

Collateral loans - You can get a secured loan in case you still can’t get a hold of a personal loan. Fixed deposits and other collaterals as such can be used to get a secured loan.
A joint loan - You can get a joint loan with your family or spouse if they have a good CIBIL score. The loan can be given on the basis of both of your credit scores. 

These methods will help you get a personal loan conveniently with an unsatisfactory CIBIL score. Make sure to be aware of the repayment plans and interest rates. Missing a loan payment will only make your credit score worse. However, there are multiple ways to make sure to stay up-to-date with your payments.

You can apply for a personal loan with Nitstone Finserve with CIBIL score >700, flexible repayment plans and minimal documentation.

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