credit score
credit score

Last Updated on April 16, 2024 by Jawad Ali

Advantages of having a good CIBIL score

Your CIBIL score is one of the first things a lender looks at when you apply for a personal loan. This data can be used by banks and other lending organisations to evaluate a borrower’s creditworthiness and ability to repay a loan. Then does this imply that only those with a high CIBIL score are eligible for loans? No, a borrower could still be eligible for a loan despite having a poor or non-existent CIBIL score.

Your CIBIL score indicates how creditworthy you are. The Credit Information Bureau (India) Ltd., often known as CIBIL, has been granted permission by the Reserve Bank of India (RBI) to produce this score for an individual. The range of a real CIBIL score is 300 to 900, with 900 denoting the maximum degree of creditworthiness. How likely it is that you will be approved for a personal loan depends on your credit score.

The way you manage paying off previous debt has an impact on your CIBIL score. By paying all your debts—including credit card bills, loan EMIs, and other overdue obligations—on schedule, you can keep your credit score high. The opposite is also true—missing a loan payment decreases your credit score.

When you’re strapped for cash, a personal loan can be useful. However, before the loan can be approved, you must meet the lender’s strict standards. Use the personal loan eligibility checker to obtain a broad idea of how much you can borrow. Your credit score, or CIBIL, will be one of the first requirements for your application. But what really constitutes a high CIBIL score? Do you think you can get a loan with a low cibil score ?

Even though it could be more difficult if your CIBIL score is poor, you might be able to obtain a personal loan with some effort.

Getting eligible for loan with a low CIBIL score:

Even though it can be challenging, you can still get an immediate loan even if you have negative credit if you follow these instructions:

  • Present income documentation to support loan repayments

Despite having bad credit, the lender might still evaluate your loan application if you get a raise at work or add another source of income. Your chances of getting a loan approved also increase if you can show that you have a reliable employment with a steady income. You need to be informed that there’s a chance your interest rate will increase.

  • Consider taking out a brief personal loan.

With a low CIBIL score and a sizable personal loan request, your lender might consider you to be a high-risk candidate. According to the lender, you have a higher likelihood of missing a loan payment. The lender might be more inclined to grant the request if the personal loan is for a smaller amount. In addition, paying back a smaller amount will be considerably simpler.

  • Obtain a guarantor or submit a combined loan application.

Having a co-applicant or guarantor with a good credit score might speed up the process of getting a personal loan if your CIBIL score is low. Make sure the KYC procedures are carried out and authorised signatures are obtained on all necessary documents.

When a lender finds a co-applicant or guarantor on your loan application with a decent CIBIL score, it undoubtedly helps you get a better deal.

  • Correct Credit Report Inaccuracies

With a poor CIBIL score, you may find it difficult to obtain a personal loan. However, there is a chance that your credit report contains mistakes or misreporting.

  • If your credit record displays a NA or NH, ask your lender to take your case into account.

A credit period that was inactive in the previous 36 months or the lack of a credit period during that time is indicated by a NA or NH on your credit report. As a result, your CIBIL report won’t contain any information on your credit score.

Tell your potential lender why there has been a period of credit inactivity. It’s likely that the loan will have a higher interest rate applied to it.

Even though following these procedures can help you get an immediate loan despite having bad credit, you’ll still need enough cash to make the repayments on time. If you do, your CIBIL rating will be even lower.

A personal loan requires a minimum CIBIL score of between 720 and 750. If you have a good credit score, lenders will easily approve your application for a personal loan. They might also provide you with the loan amount you want at a low interest rate. Whereas your credit score is between 650 and 749, lenders may decide to give you a house loan after learning more about your other financial circumstances. However, the minimum CIBIL score necessary for a home loan is often 650. Scores between 550 and 649 are considered ordinary and need improvement. However, a 750 minimum CIBIL score is required for an instant approval on an unsecured personal loan. 

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Noah Patel is a finance specialist with over 10 years of experience in the financial industry. He has worked with a variety of clients, including individuals, small businesses, and large corporations, to help them achieve their financial goals. Noah's expertise includes financial planning, investment management, risk management, and retirement planning. He is dedicated to helping his clients make informed financial decisions that align with their long-term objectives. Noah is a frequent contributor to financial publications and has written extensively on topics such as personal finance, investing, and financial planning. His mission is to educate and empower individuals to take control of their financial future. When he's not working with clients or writing, Noah enjoys traveling, playing tennis, and spending time with his family.