A good credit score is vital for loan approval. Hence, it is a must to check CIBIL score before beginning your loan application process. If it is poor, you need to strategically improve it to avoid rejection of loan application. However, if you urgently need funds, you can also get loan approval with a poor CIBIL score.
7 Tips to Get a Loan without Having a Good CIBIL Score
Below are a few ways by which you can get a loan approval despite having a low CIBIL score:
- Opt for a lower amount
If you have a poor CIBIL score, it would be best to apply for a lower loan amount. This is because financial institutions might doubt your loan repayment capability if you opt for a higher credit amount. Likewise, they would know that borrowers will not have to pay extensive EMI for a lower amount. Hence, it would be easier for them to pay the monthly instalments.
- Get a co-applicant
A co-applicant can aid you immensely in getting loan approval. This is so because financial institutions can be sure that even if you delay the monthly instalments, they can approach your co-applicant for the same. Nonetheless, getting a co-applicant with a good credit rating and an error-free credit report is a must. This influences financial institutions to approve your loan application with ease.
- Apply for a collateral-based loan
Collateral can positively influence financial institutions to approve your loan application. They are aware that if you delay the loan repayment or are unable to repay the loan before the set tenure, they can sell off the collateral to get the money.
Location of your collateralised property also influences your loan approval. For example, if you mortgage property at a popular location, there are high chances that you will get loan approval for an extensive amount. On the other hand, if you collateralize an old property located in a relatively deserted region, you may get approval for a far lesser amount only.
- Produce proof of income
You can produce payslips as income proofs to a financial institution. A higher income and authentic evidence will ensure you get approval for a higher loan amount. This is so because financial institutions will understand that you can pay monthly instalments without delay. So, they will be able to trust you more with a higher amount.
- Get a guarantor
You can request your friends or family members to be a guarantor for your loan application. This way,a financial institution will know that there is a person they can approach if there is any delay or default in loan repayment. However, you must ensure that your guarantor has a good CIBIL score and financial standing. Otherwise, it would be challenging to get loan approval.
- Agree to a higher interest rate
A higher interest rate would let financial institutions know that you can repay them the loan amount within a shorter span of time. So, with a low CIBIL score, you can agree for a higher interest rate if you want to get loan approval. You might have to compromise on your lifestyle for a few months, but you can meet your urgent need for funds.
- Apply for a NA or NH on a credit report
If you are a first-time borrower, you can request your lender to mention NA or NH for your credit score. Thus you will not have to worry about a credit score to get approval for your loan.
Steps to Check CIBIL Score
Below are the steps which you can follow to do a cibil score check:
Step 1: Visit the official website of a financial institution.
Step 2: Click on the “Check CIBIL score” button.
Step 3: Enter your personal details.
Step 4: Click on “Get OTP”
Step 5: Enter the OTP to verify your details.
Once completed, you can receive your credit report with your CIBIL score. In addition, you can easily convert your CIBIL score to an Equifax credit score if your lender demands it.
Meaning of Different Credit Score Range
The meaning of different credit score ranges is as follows:
- 750-900: This implies that you are a low-risk borrower and can quickly get loan approval.
- 700-749: You can opt for some loans and credit cards if your credit score lies in this range.
- 550-699: This is not an attractive credit score to lenders; hence, you need to take essential steps to improve it.
- 350-549: If your credit score lies in this range, you will be considered a high-risk lender and have to work hard to fix your credit score.
- NIL: If you are a first-time borrower, your credit score will be NIL.
You can check CIBIL score for free. Hence, you must avail this opportunity before you apply for a loan. If your loan application gets rejected because of a poor credit score, it can lower your credit score even further.
