If you wish to get a personal loan with low credit scores, it might appear challenging at first. While traditional institutions and banks might refrain from approving personal loans with a poor credit history, some private lenders and online institutions offer this option customized to the individual’s situation. Ultimately, you should look for ways to improve your credit score to enhance the chances of approval.
You can have a low CIBIL score due to high debt utilization, missed payments, or restricted credit history. While approving a low CIBIL personal loan, lenders look into factors like existing debts, repayment capacity, and income level. Some lenders offer unique services for bad credit loans. At the same time, there are others that offer the option of secured loans or might need a guarantor.
Understanding Low Credit Scores
Typically, a low credit score is due to certain factors like missed payments, multiple loan applications, high credit utilization, or shorter credit history. When it comes to applying for a low CIBIL score personal loan, you should understand that credit score ranges from poor to excellent. Usually, lower CIBIL scores pose certain risks to lenders with respect to repayments.
When you have a low CIBIL score, lenders and institutions might not be willing to give approval for a personal loan. They fear that you might mess up the repayment.
While a poor CIBIL score can limit your borrowing options, you can still apply for a personal loan with a low credit score.
How to Get a Personal Loan with Low Credit Score?
- Secure a guarantor or jointly apply for a loan
Your personal low credit score can prevent you from securing a loan, but one viable solution could be to apply for a joint loan. If you can get a guarantor who has a good credit score, or apply for a loan with such a person, there are chances that your application will go through. Lenders will see the repayment ability of the guarantor or borrower with a reliable credit score and extend the same trust to you.
- Work towards building a good credit score
Adopt healthy financial habits, such as spending only when necessary, saving more and investing in Public Provident Fund, National Savings Certificate, bonds and equities. With cautious spending, proper savings, and timely repayment of any debt in your name, you will be able to build a healthy credit score.
- Apply for a smaller loan
Begin with going for a loan of a smaller amount, even if your requirement is of a larger amount. The reason being, if you’re able to repay the smaller amount, your EMIs are being made on a timely basis, it will have a positive impact on your credit score. Eventually, the lender will see you as a borrower with repayment ability and perhaps you can secure higher loan amounts. Do regularly check your credit score, and keep an eye on your expenses. Even the slightest drop in your credit score should prompt you to take immediate corrective measures.
Choose NBFCs or fintech companies to secure a loan
There’s no denying that NBFCs and fintech companies have revolutionized banking and financial services. They serve the segment that is traditionally unserved and underserved, the segment that a brick and mortar institution will not usually service. You have a higher chance of getting instant loan from NBFCs or Fintech companies with low credit score as compared to getting a personal loan from a traditional bank. Some of these institutions even help you build a good credit score. Thus, do your due diligence, and opt for a RBI-regulated NFBCs or fintech partner to secure your personal loan, and ensure your financial inclusion and independence.
Ensure a stable source of income
Even if this is passive, such as that from rental property, do try to see that you have a reliable source of income, so that lenders can see your application in a favourable light. Ensure that all your papers are in order, that you have some disposable income each month, try to save more than what you earn, and most importantly, try not to have a running debt.
Healthy financial habits go a long way in making one go from a mere borrower to a reliable borrower; it helps lenders know you’re someone they too can bank upon; it sets you on the right path to financial freedom.
Why Choose Stashfin for Low CIBIL Score Personal Loans?
With Stashfin, a reliable low credit score personal loan lender, you can get instant personal loans even with low credit scores. The innovative low CIBIL score personal loan app combines technology with the borrower-centric approach to make sure that even those with less-than-perfect credit can access the desired funds.
Some more benefits of choosing Stashfin for low CIBIL score personal loans are:
- Easy Application Process: The app has a simple loan application process that needs minimal documentation. This efficient process minimizes documentation and expedites loan approvals.
- Inclusive Eligibility: Stashfin understands that a low CIBIL score does not define your financial capability exclusively. Therefore, the digital lending platform offers personal loans to those with poor credit.
- Better Interest Rates: Even while the lending platform caters to individuals with low CIBIL scores, Stashfin provides access to competitive interest rates. This keeps the overall cost of the loan manageable.
Common Mistakes to Avoid for Applying for Personal Loans
- Choosing the Wrong Amount: If you end up borrowing more than what is needed, you will have to face repayment pressure. At the same time, when you request too little, it might not fulfill your financial requirements.
- Ignoring Loan Terms: In most cases, borrowers do not go through the loan documents thoroughly. This document contains relevant information like hidden fees, repayment terms, and penalties.
- Choosing Multiple Lenders: If you submit multiple loan applications at a time, it might affect your credit score negatively. Moreover, it might also make the lenders perceive you as a high-risk borrower.
Conclusion
Getting a personal loan with a low credit score may be challenging, but it is not impossible. By improving your financial habits, choosing the right lender, and exploring secured or guarantor-backed loans, you can increase your chances of approval. Additionally, opting for lenders that specialize in bad credit loans or using credit-building strategies can help you secure better terms.
Frequently Asked Question
Can I get a personal loan with a low CIBIL score in India?
Yes. You can get a personal loan with a poor credit score in India. You need to search for the right lenders that offer access to specialized loans. You can also improve your chances by applying with a guarantor.
Which app is best for personal loans with a low credit score?
If you wish to apply for a personal loan with a low credit score, Stashfin is a leading personal loan provider in this case. The lending app offers a simple loan application process with minimal documentation.
How can salaried individuals get a personal loan with a low CIBIL score?
Personal loans for salaried with low credit scores are possible by choosing reliable lenders like Stashfin. You can also apply with a co-guarantor to improve your chances.
What is the CIBIL score required for personal loan approval?
To maximize your chances of personal loan approval, you should maintain a good credit score of 650 or above. A good credit score boosts your loan approval chances instantly.