Ways to Get a Loan Without Good CIBIL Score | Loan Tips
A good credit score is important for loan approval. Hence, it is essential to check your CIBIL score before starting your loan application process. If it is bad, you need to improve it strategically to avoid loan application rejection. However, if you need funds urgently, you can also get loan approval with a poor CIBIL score.
7 Tips to Get a Loan Without a Good CIBIL Score
Below are some ways you can get loan approval despite a low CBIL score:
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Choose a lower amount
If your CIBIL score is bad, applying for a low loan is better. This is because financial institutions may doubt your ability to repay the loan if you opt for a higher loan amount. Similarly, they will know that borrowers do not have to pay huge EMIs for small amounts. This will make it easier for them to pay the monthly instalments.
Get a co-applicant
A co-applicant can help you a lot in getting loan approval. This is because financial institutions can be sure that even if you are late in paying the monthly instalments, they can approach your co-applicant for the same. Nevertheless, getting a co-applicant with a good credit rating and an error-free credit report is essential. This influences the financial institutions to approve your loan application easily.
Apply for a collateral-based loan
Collateral can positively influence the financial institution to approve your loan application. They know that if you default or cannot repay the loan before the due date, they can sell the collateral to get the money.
The location of your collateral also affects your loan approval. For example, if you mortgage a property in a popular location, you are more likely to get a loan approved for a larger amount. On the other hand, if you mortgage an older property located in a relatively secluded area, you may only get approved for a lower amount.
Submit proof of income
You can produce a payslip as proof of income at a financial institution. High income and genuine proof will ensure that you are approved for a higher loan amount. This is because financial institutions will know that you can pay the monthly instalments without delay. Hence, they will be able to trust you more.
Get a guarantor
You can request your friends or family members to be guarantors for your loan application. This way, a financial institution will know that they can be contacted in the event of a delay or default in repayment. However, you should ensure that your guarantor has a good CIBIL score and financial standing. Otherwise, loan approval will be challenging.
Agree to higher interest rates
A higher interest rate will tell financial institutions that you can repay the loan amount in a shorter period. So, with a low CIBIL score, you may agree to a higher interest rate if you want to get the loan approved. You may have to compromise your lifestyle for a few months, but you can meet your urgent need for funds.
Apply for NA or NH on the credit report
If you are a first-time borrower, you can request your lender to specify NA or NH for your credit score. This way you don’t have to worry about your credit score to get your loan approved.
Steps to Check CBIL Score
To check your CIBIL score you can follow the below steps:
- 1: Visit the official website of the financial institution.
- 2: Click on the “Check CIBIL Score” button.
- 3: Enter your details.
- 4: Click on “Get OTP”.
- 5: Enter the OTP to verify your details.
Once done, you can get your credit report and your CIBIL score. Also, you can easily convert your CIBIL score to Equifax credit score if your lender demands it.
Meaning of different credit score categories
The different credit score categories mean the following:
- 750-900: This indicates that you are a low-risk borrower and can get loan approval faster.
- 700-749: If your credit score is in this range, you can opt for certain loans and credit cards.
- 550-699: This is not an attractive credit score for lenders; So, you need to take the necessary steps to improve it.
- 350-549: If your credit score is in this range, you are considered a high-risk borrower and will need to work hard to fix your credit score.
- Zero: If you are a first-time borrower, your credit score will be zero.
You can check your CIBIL score for free. Therefore, you must use this opportunity before applying for a loan. If your loan application is rejected because of a bad credit score, it can further lower your credit score.