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Getting a personal loan with a low CIBIL Score

Getting a personal loan with a low CIBIL Score may pose challenges, but it's achievable. Follow these 5 tips to increase your loan approval chances.

In India, a personal loan is one of the most convenient ways to get cash for emergencies or your aspirations. Personal loan providers usually don't limit how you use the money, whether it's for your daughter's marriage, furnishing your home, higher education for your children, or a family holiday.

But remember, to qualify for a personal loan, you need to meet the criteria set by the lender. Your credit score plays a big role in determining your eligibility.

What is a CIBIL Score?

CIBIL stands for the Credit Information Bureau (India) Limited. A CIBIL Score is a 3-digit number ranging from 300 to 900 that expresses your creditworthiness. CIBIL and other credit bureaus assign your score based on your credit history. The higher your score, the better your creditworthiness. This means you can get your loan application approved faster and with favourable loan terms.

Typically, lenders consider a score of 700 and up as a good credit score, and anything below 600 is poor. If your CIBIL Score is low or doesn't meet the lender's minimum credit score requirement, your loan application may get rejected. In this case, you might want to consider ways to improve your credit score.

However, many lenders provide instant personal loans for those with low CIBIL Scores.

Are you considering a personal loan? Check our personal loan eligibility criteria first to see if you qualify to apply.

5 tips for a low CIBIL Score loan application

1. Provide collateral

A personal loan is an unsecured loan. This means you don't have to pledge an asset to the lender to borrow money. But if your credit score is low and your borrowing history bad, the lender may hesitate to approve your loan application. 

If this happens, you can choose to offer collateral. This can make the lender feel more confident about getting their money back, and they might agree to give you the loan. By providing collateral, you can also negotiate the loan terms and have longer to pay back the money.

2. Get a joint loan

Another good way to get your low CIBIL Score loan application approved is to apply for a joint personal loan with someone who has a high credit score (above 700). When you apply together, the lender looks at both your incomes. If they think you can pay back on time, they'll most likely approve the loan.

3. Apply for a smaller loan

Getting a personal loan with a low CIBIL Score is doable. Just be strategic in your approach. Say you need a 1 lakh loan, but your application might get rejected due to your credit score. In this case, consider applying for a smaller amount, like INR60,000. Opting for less may give the lender confidence in your repayment ability. You can then consider options like borrowing from a friend or family member to cover the remaining amount needed.

4. Submit all proof of income

When you ask for a personal loan, lenders decide if they'll give it to you by looking at how well you can pay it back. So, if your CIBIL Score is low, submit all your income proof to show you can manage your money well. This will help the lenders trust you'll pay back what you borrow.

5. Check and resolve errors in your credit report

Your credit score might drop because of mistakes in your credit report. When applying for a personal loan, check your credit report thoroughly, identify any errors, and immediately fix them with the credit agency. This prevents issues like loan rejection or delays due to a low CIBIL Score.

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