How To Get Personal Loan on Low CIBIL score

How to get a Personal Loan with a CIBIL score of 550?

Personal loans are one of the easiest loans to acquire. They are unsecured loans, which means one does not need to offer collateral. They can be used for a multitude of purposes. There is minimal documentation involved and a relatively shorter processing time as well. However, one of the most important considerations when you apply for a personal loan is your CIBIL score.

CIBIL Score for Personal Loans

CIBIL score is a credit score provided by CIBIL, which is one of India’s leading credit information companies. The score reflects a person’s credit history based on their financial behaviour. It includes loans and repayments, credit card payments, and more. The score ranges between 300 and 900; the higher the score, the healthier the credit history is.

A lower credit score can hurt your chances of being approved for a credit card, home loan, and other products. Usually, a credit score of 750 or more is considered excellent. People with a score over 750 can expect better approvals for financial services like loans. A score over 700 is decent, while getting a personal loan for a CIBIL score of 550 or lower can be difficult.

Even with a low CIBIL score, you can still access an instant cash loan through customized solutions. 

The table below will give a better idea of a good and a bad credit score.

Tips to get a Personal Loan with a low CIBIL score:
 

Obtaining a personal loan with a low CIBIL score can be challenging, but it's not impossible. By implementing the following strategies, you can enhance your chances of approval and secure the funds you need.

1. Apply with a Co-Applicant

Involving a co-applicant or guarantor with a strong credit history can significantly improve your loan approval prospects. Lenders may view the combined creditworthiness more favorably, reducing perceived risk.

2. Offer Collateral

Secured loans, which require collateral such as property or fixed deposits, provide lenders with assurance against default. This security can make lenders more willing to approve your loan despite a low credit score.

3. Demonstrate Stable Income

Providing proof of a steady and sufficient income reassures lenders of your repayment capability. Submit documents like salary slips, bank statements, or income tax returns to substantiate your financial stability.

4. Opt for Smaller Loan Amounts

Applying for a smaller loan amount reduces the lender's risk, increasing the likelihood of approval. Once you've established a reliable repayment record, you can consider applying for larger amounts in the future.

5. Improve Your CIBIL Score

While this is a long-term strategy, taking steps to enhance your credit score can open doors to better loan opportunities. Focus on timely bill payments, reducing outstanding debts, and maintaining a low credit utilization ratio.

6. Maintain a Low Debt-to-Income Ratio

A lower debt-to-income ratio indicates better financial health and enhances your loan eligibility. Aim to reduce existing debts and avoid taking on new ones before applying for a loan.

By implementing these strategies, you can improve your chances of securing a personal loan even with a low CIBIL score. Remember, responsible financial behaviour over time will not only aid in loan approvals but also contribute to a healthier credit profile.

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Personal Loan For Low CIBIL Score

Since personal loans are versatile and easier to acquire, people use them for many reasons, including buying a vehicle or remodelling the house, getting married, and repay their other loans.

While a low CIBIL score would reduce the chances of getting approved for a personal loan, it is not impossible. Other factors that affect your chances of getting a loan include your status of employment, income, and credit report. The report is a more detailed account of your financial history. A clean report suggests that you practice healthy financial habits and are not a risky candidate.

If you want a personal loan for a CIBIL score of 550 or above, you can get it by fulfilling a few parameters:

Calculate your needs

Do not apply for a personal loan with a low CIBIL score if there is no need. You can use the IDFC FIRST Bank personal loan EMI calculator to get a better picture of how long will be required to pay EMIs at different interest rates. Based on these calculations, you can start your loan application process online.  You can also reach out to IDFC FIRST Bank customer care on 1800 10 888 for more information on the Personal Loan application process.

Ensure all your documents are in place

Personal loans require minimum documentation, so you only need to gather all the right stuff and ensure it is per requirements. It includes your proof of identity and residence, salary account bank statement for the past three months, and salary slips for the past three months.

Research before you apply

A select few banks or financial institutions may be willing to offer a instant personal loan for a CIBIL score of 550 or close to that. Find these banks and apply to only a select few. Applying to multiple places does not reflect well on your credit report.

Once you secure a loan, ensure you use it responsibly. If you are using it to consolidate and pay off your previous loans, ensure that you are doing so in the right manner.

Furthermore, remember to pay your personal loan instalments in full, and on time. Ensure that your loan amount is paid back in full within the decided duration. Also, do not try to get any other loan before you have paid off your personal loan in full.

Loan repayment done responsibly should, in part, help in rebuilding your credit score. From here, you can make better financial decisions to build better a better score.

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