Srinagar May 09 (KNS): t is common knowledge that there is a particular criterion that you must fulfill to get personal loans. Some of these factors like sufficient income to repay the loans, etc., are already known. However, what will happen if a person with a bad credit score applies for a loan?
Will their demands be fulfilled? In this blog, we are going to discuss this in detail and also help you with the steps required to avail the loans as well. We will also lay our focus on what is CIBIL or credit score as well.
Understanding CIBIL Score
CIBIL score is basically a scale that the financial institutions assess to understand the risks associated with lending to a particular person. If you are trying to opt for a personal loan, the average CIBIL score required for such is 750 or above.
However, these scores and their regulations vary from one bank to the other. A score which is lower than 600 is generally deemed a poor CIBIL score and usually, a bank might take additional considerations before availing the loan.
If a personal loan app or a company approves your loan request, they may charge a higher interest rate.
Now let us see more about the steps and processes involved in getting a personal loan approved even if the CIBIL score is low.
Steps to Get a Personal Loan for Low CIBIL
Using the right strategic approach there is a high chance that you are able to get a personal loan. This applies to you even if your credit score is low, here are some of the steps:
1) Ensure You Have a Stable Income
The first step before you opt for a loan is to show proof that you can pay back using a stable income source. The higher the income you can show, the better chances you have to get an appropriate income. Many NBFCs provide personal loans for salaried individuals. Provided they are working for an extended period of time and are drawing higher salaries.
2) Lower the Income-to-Debt Ratio
The relationship of outstanding debt to salary indicates the extent of the obligation to pay. It is feasible to decrease this distinction by taking care of your credit card dues and different liabilities before deciding on personal loans.
3) Joint Personal Loans
A joint personal loan is a strategy to bring in another person to get your loans approved.Click Here To Follow Our WhatsApp ChannelThe basic idea is that it helps enhance the eligibility to get the loans by getting the necessary approvals. However, please note that your partner in the loan must have a comparatively better CIBIL score. Thus, it helps dilute the risks that a financial institution might consider while approving a personal loan.
4) Additional Documents
A lender may also need some extra documentation to sanction a personal loan in case of a bad credit score. Please ensure that your documents are up-to-date reflecting all the accurate data or information.
5) Opt for a Smaller Amount
In case your CIBIL score is lower than 500, it is always better to select a comparatively smaller loan amount. Such a strategy can help amplify the chances of getting the approval and sanction loan amount. Additionally, it is also recommended to check the offerings of other institutions and their repayment rates.
Additional Tips to Manage CIBIL
Some additional steps to ensure that you meet a comfortable situation regarding your CIBIL are as follows:
? Always try to meet the deadlines regarding your credit card spendings or other loans you have taken previously.
? Prepayment of loans is always a great option to get some extra cash.
? Keep your EMI dates close to your salary dates to help with smooth loan repayment before paying for other commitments.
Conclusion
Using the appropriate strategy, you can get a personal loan even with a bad credit score. The strategy that must be followed is to manage your dues and ensure that the lenders can trust you. Try to improve your CIBIL or credit score by properly paying off the due amounts and trying to reduce unnecessary spending.
Managing spending helps you to not borrow more than required and reduce your outstanding dues. Always remember personal loans can be obtained even if you have low credit scores. However, as these loans are unsecured the companies providing the loans need some form of assurance to pay back.