You need a high CIBIL score to get a personal loan or another form of a loan. A high CIBIL score signifies a strong repayment history and credibility. With a CIBIL score of 750 or higher, not only are you guaranteed a fast loan, but you also qualify for favourable terms and circumstances.
You can turn to an unsecured personal loan to cover unexpected costs like medical bills, urgent vacation plans, or other unexpected costs. Factors, including income, CIBIL score, etc., play a role in deciding whether or not to grant you this loan.
You can get an urgent and quick loan in India, regardless of your CIBIL score. Sadly, a high CIBIL score is not easy to achieve or keep. A low credit score can result from unforeseen financial difficulties or careless handling of money.
Personal Loan for Credit Score 550-600
There is a massive demand for unsecured personal loans as they need little security to be given to the bank. Also, one can get these loans in no time. But, as these are unsecured loans, the interest rates are higher, and the eligibility criteria are stricter than other secured loans, such as home loans and auto loans.
A minimum credit score of 750 is typically required for personal loan approval. But, there are a few lenders who offer personal loans to even those whose CIBIL scores are on the lower end of the spectrum, as long as it is above 600.
The next question would be if you can get a personal loan for a CIBIL score of 600 in India. It will be tough. While you may find lenders who give a personal loan for a CIBIL score of 550, the terms and conditions will not be very favourable. It is because the lender will have no faith in such a borrower’s repayment ability and will thus avoid giving a loan.
If the loan is sanctioned, the interest rates will be higher, even going above 40% per annum, and the repayment term will also be low. Also, you should not expect a large loan amount.
Personal Loans for a Low Credit Score
People take out personal loans for many things, from paying a debt to financing big-ticket purchases like cars and home renovations to life events like weddings, trips, or honeymoons.
In addition to work and income, your credit history also plays a role in whether or not you are approved for a loan. If you have a low credit score, the chances of your personal loan approval would be lower, but not reduced completely.
This report provides a more in-depth look at your financial past. A good credit record indicates good financial behavior and an absence of risk as a potential borrower.
How to Get Personal Loan Approval With a Low Credit Score
It may be difficult, but not impossible, to secure a personal loan with a low credit score. You can still get a personal loan, even with a low credit score of 550 and sometimes even with a score as low as 500. Here are some options to consider if you need a personal loan but have a low credit score:
Request for a Small Loan Amount
Some lenders may be more willing to approve loans for lower amounts. However, the lender’s risk increases with a larger loan amount. This is why, if your credit score isn’t up to par, applying for a modest loan could make it simpler for you to get approved.
Determine How Low Your Credit Score Is
The CIBIL report isn’t always up-to-date. This impacts your credit score. Regularly checking one’s CIBIL score is essential for catching any mistakes and fixing them. You can even check your CIBIL score online on the official websites of the credit bureaus.
Apply with A Co-applicant
A person with a poor credit score may have more success getting a loan if there is a co-applicant with a good CIBIL score. A co-applicant repays the loan in the event of your default.
You can get a personal loan in this manner with convenient repayment conditions.
Provide Proof of Income
The ability to make loan payments is directly proportional to your monthly income, as the banks or lenders check the source of income of the person applying for a loan. Therefore, having high-paying work, the second source of income or consistent cash flows can improve a loan application’s chances of approval.
Mostly, having the financial resources to repay a loan is a simple matter of comparing the monthly payment amount to the borrower’s income. Thus, it is possible to have a personal loan approved even with a low credit score.
The Bottom Line
While applying for a loan, you must keep in mind that the banks consider a CIBIL score ranging between 500 to 600 a poor score. There are only a few lenders who will give you a loan with such a low CIBIL score. Also, if you manage to get a loan, your credit score could affect the interest you pay on a personal loan.
Now, you can use your newfound knowledge to qualify for a personal loan with a credit score of 600 or better. By checking your CIBIL score frequently, you can take quick action that will help you maintain or improve your score.
The CIBIL website, as well as those of individual lenders, will display your credit rating. Piramal Finance provides access to a variety of financing options and tools for monitoring and enhancing financial standing. To read more such informative articles, visit https://www.piramalfinance.com/ right now.