How to Get a Personal Loan with a Low CIBIL Score?

A CIBIL score is a numerical representation of your creditworthiness. A low score can make it challenging to obtain a personal loan. However, it's not impossible. With the right strategies, you can still secure a personal loan even with a low CIBIL score.

In this guide, we'll walk you through practical steps and tips on navigating the loan application process effectively, regardless of your credit history.

So, let's get started!

Your CIBIL score is like your financial report card. It’s an indicator of how well you manage your money. Your score goes up if you're good at paying your bills on time, not borrowing too much money, and not having lots of debt. But your score goes down if you often forget to pay your bills, borrow too much, or have lots of debt. This score usually ranges between 300-900. When you want to borrow money, such as by taking out a loan or a credit card, banks and lenders look at your CIBIL score. They're more likely to lend you money and give you better deals if it's high.

Refer to the table below to know about good cibil score and low cibil score.

▶️Read our blog to learn “How to Improve Your CIBIL Score?”

A low CIBIL score can often feel like a financial roadblock, especially when you need a personal loan. Here are a few necessary tips that one can follow. These strategies will help one to increase their chances of securing a personal loan, even with a low cibil score:

1. Check Your CIBIL Report

The first step is to obtain a copy of your CIBIL report. This will help you identify any errors that might be negatively impacting your score. If you find any inaccuracies, dispute them immediately.

2. Improve Your Credit Utilization

Your credit utilization ratio is the amount of credit you're using compared to your total credit limit. Aim to keep it below 30%. If it's higher, try to reduce your outstanding balances.

3. Build a Positive Payment History

Make sure to pay all your bills on time, including credit card bills, utility bills, and loan repayments. Even small, consistent payments can significantly improve your credit score over time.

4. Request the Lender to Consider NA or NH in Your Credit Report

If your credit report shows NA (not applicable) or NH (no history) due to a lack of credit activity in the last 36 months, discuss this with the lender. They may approve the loan at a slightly higher interest rate. This can be an option if you have no credit history or a very low CIBIL score.

5. Apply with a Co-Applicant

Involving a co-applicant or having a guarantor with a decent CIBIL score can boost your eligibility for a low credit score loan. Their income and credibility will enhance your chances of approval. But remember, your co-applicant will be held responsible for repaying the loan if you can't.

6. Consider Applying for Secured Loan

If you have assets like property or a vehicle, a secured loan might be an option. These loans often require collateral, which can reduce the lender's risk.

7. Apply for a Smaller Loan Amount

When you apply for a smaller loan amount, it reduces the risk for the lender and can get you approved for a personal loan.

A low CIBIL score doesn't have to be a permanent barrier to obtaining a personal loan. By understanding the factors that influence your credit score and taking the necessary steps to improve it, you can increase your chances of securing the financing you need.

Disclaimer: This blog is solely for educational purposes.