Lenders measure your ability to repay a loan by checking your credit score. This score summarizes your credit history, the amount of credit you have taken, how you have repaid it, and other factors. All this helps a lender determine if granting you a personal loan is a risky proposition or not, since a personal loan is an unsecured loan and the lender has no other assets to fall back on.

CIBIL score depends upon the repayments of personal loans, vehicle loans, home loans against a property in Mumbai or elsewhere and/or credit card debts. In case the repayments are done in a timely manner, it will translate into a good CIBIL score. On the other hand, untimely payment of dues and EMIs will have a negative impact on your CIBIL score.

What is CIBIL Score and why is it important for Personal Loan?

CIBIL (Credit Information Bureau, India Limited) prepares a credit score that acts as the first criterion to check the eligibility of a person for a personal loan. This credit score is a three-digit numeric summary of your entire credit history. This is based on the information provided by banks and other financial organizations on a monthly basis whose value ranges from 300 to 900.

The score lower than 750 points is considered low. Banks generally do not sanction personal loans of people with a low CIBIL score, or even if they do, they may charge a very high rate of interest.

The following are the factors causing a low CIBIL score:

  • Multiple loans cause a low CIBIL Score.
  • High Utilization of credit limits.
  • Untimely payment of loan EMIs or Credit card dues.
  • A higher percentage of unsecured loans.
  • Having no credit history at all.
  • Too many rejected loans/credit card requests.
  • Settling credit cards with the bank by paying a lower amount than the dues.

How to get a personal loan with a low CIBIL score?

A low CIBIL score might lower your chances to get a personal loan sanctioned but still, there are other options that could be explored in order to avail a personal loan with a low CIBIL score.

The following are some of the options which could help to get a personal loan despite a low CIBIL score:

  • Collateral loan: In case if the personal loan application does not get sanctioned, one can try to get a secured loan. Collaterals such as gold, land, fixed deposits, etc. can be used to avail a secured loan even with a low CIBIL score.
  • Check for tie-ups between your employer and the lender: If you work in a reputed firm, there are fair chances that it might have tie-ups with the lenders as a part of corporate relations. As a result of such tie-ups, the bank often offers special facilities on loan and other banking facilities. This could be helpful in getting a loan.
  • A joint loan with your spouse or family member: Check with your spouse and family members if they have a good CIBIL score. In case anyone in the family has a good CIBIL score, you can take a joint loan which could be sanctioned based on both of your CIBIL score.
  • A guarantor: If you are able to get a guarantor among family or friends who have a good CIBIL score then there is a higher possibility you might get a personal loan sanctioned based on the guarantor’s CIBIL score.
  • Other Sources: Other sources apart from banks that might lend you are worth considering too. Non-banking finance companies (NBFCs) are more than willing to offer you a loan but at a higher rate of interest than that of the bank.

Although a good CIBIL score is required for getting a personal loan, these alternate options mentioned can help you to get a personal loan despite a low CIBIL score.

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