When you apply for a loan or a credit card, lenders measure your ability to repay the loan by checking your Credit Score. The CIBIL, which is one of the oldest Credit Bureaus in India evaluates your score based on your credit history, the number of credits you own, the amount of credit you have taken, past repayment, and other factors. All this helps a lender determine if you are a responsible borrower to grant a loan.
A strong CIBIL score makes borrowing easy. While lending money, lenders consider a score of 750+ as it indicates that you have good repayment habits. Also, you get the power to negotiate lower interest rates and loan terms. When it comes to credit cards, you’ll be eligible for various features like air miles, rewards, cash backs, etc.
A low CIBIL score might lower your chances to get a personal loan approved. But, there are other options which could be explored to avail a personal loan with a low credit score.
Check credit score
Mistakes or errors in your CIBIL report can hamper your credit score. This happens usually when the latest information isn’t been updated against your record. Such errors can take a toll on your score for no fault of yours. So, review your report regularly and ensure there are no mistakes in your personal information & other details.
Note that you are entitled to a free credit check every year by credit bureaus like CIBIL, CRIF High Mark, Equifax, and Experian. Make the most of it and monitor your report. If you come across any error, get it rectified. This will boost your credit score.
When you apply a high amount loan with a low CIBIL score, this indicates more risk to lenders. So, instead of getting rejected for higher amounts, ask for a low loan. The lender may feel comfortable granting you the loan.
If you are not getting personal loan approval, try to get a secured loan. Here, you need to give Collateral in the form of security. The collateral can be Land, gold, fixed deposits, etc. In case, you Fail to repay the loan, the security that you put against your loan will be liquidized and the loan amount will be taken.
Non-Banking Finance Companies (NBFCs) are other sources apart from banks that are worth considering. They lend money for low credit score customers, but at a higher rate of interest than that of the Bank.
These alternate options can help you get emergency personal loans despite a low CIBIL score. But, ensure you build a good credit score to get the best deals on loans and credit cards.
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