Personal Loan

Personal Loan For Low CIBIL Score And How To Improve Credit Score


A personal loan is the best way to meet unexpected financial needs. When you apply for one, the CIBIL score is the first thing a lender checks. Acquiring a personal loan for a low CIBIL score can be challenging. But this is not impossible. You would be required to make some changes to get the loan.

But the best option is to improve your credit score. This will open opportunities for you to take loans in the future easily. Read through this guide and get all your answers quickly.

Understanding CIBIL Score

CIBIL score is a measure of your creditworthiness. Credit Information Bureau (India) Ltd is an institution that calculates credit scores. It is a credit rating agency authorised by RBI. The CIBIL score rangess from 300-900. 

A score above 700 is considered daily good for a loan. Any score below 500 can lead to the rejection of the loan request. A personal loan for a low CIBIL score is not easy to acquire. 

The following points are included in calculating credit score:

  • Payment history for 30%.
  • Credit exposure for 25%
  • Credit type and duration for 25%
  • Other factors like an active loan and number of queries for 20%.

Top reasons for low credit score

The CIBIL score comprises four things. A delay in fulfilling any of these can cause a low credit score. The top factors are:

  • Poor payment record for the existing credits. It can be delayed repayment of loan EMIs or credit card instalment.
  • Frequently paying partial EMIs is a reason for low credit scores.
  • Submitting multiple applications for new loans and credit cards can have a negative impact too. 
  • Rejection of a credit application increases the chances of a low credit score.
  • A high credit utilisation ratio causes low credit scores.
  • A poor mix of credit choices also lowers the credit score.
  • A low credit score can result from an error in credit calculation.

Factors considered for a personal loan

A personal loan is an unsecured loan. You can use it to meet multiple financial needs. This loan is one with quick processing and disbursal. The factors that impact personal loan approval are:

  • Your income
  • CIBIL score
  • Employment history
  • History of previous loan repayment
  • Relationship with the bank
  • Amount required
  • Age
  • Debt-to-income ratio

But a personal loan for a low CIBIL score is usually rejected. Lenders avoid this due to the risk of non-repayment. But there are some tips through which personal loan for low CIBIL score holders is possible.

Tips to get a personal loan for a low CIBIL score

If you want a personal loan for a low CIBIL score, here are a few tips:

  • Go for a smaller amount

A small personal loan for a low CIBIL score is the first solution. A lender will consider you a risk if you apply for a high amount with a low credit score. But if you reduce the number of applications, the chances of approval increase. Most of the time, the lender communicates the amount it can approve. You can consider the same and apply for a lower personal loan for a low CIBIL score.

  • Apply with a guarantor

You can apply for a joint loan. Getting a co-applicant to acquire a personal loan for a low CIBIL score is a great solution. The lender will consider the details of both applicants. This will offer you an opportunity to get a high-value loan too. Also, the co-applicant will share the responsibility of repayment. This will help you to improve your credit score as well. 

  • Present proof of income to support repayment

A big concern with lenders is the repayment of loans. If you apply for a personal loan for a low CIBIL score, the risk of non-repayment is high. The solution is to present an income source to support your repayment schedule. You can share the details with proof if there is an increase in income. This will increase the approval probability.

  • Check for errors in the credit report

There might be errors in the credit report. You can spot those errors and raise a query with CIBIL. Reporting such errors can help you to increase your credit score. Ensure that you have the necessary information on your report when you apply for a personal loan for a low CIBIL score.

  • Check with another lender

Sometimes, banks might not approve a personal loan for low CIBIL scores, but other financial institutions will. You can go for NBFC or private finance and get your loan. There might be a change in interest rate. But the chances of approval are high.

Tips to improve CIBIL score

If you are facing issues with applying for a personal loan for a low CIBIL score, you can try to increase the same. Some of the tips that you can use to improve your CIBIL score are:

  • Check your Credit Report

Start with checking your credit score. See if you can rectify any errors. Ensure to get the error is rectified at the earliest.

  • Pay outstanding bills

Make sure that you pay off all your credit bills on time. You should make sure that there are no lapses in EMI payment. 

  • Credit use 

An important factor that can improve credit scores is improving credit use. You should use only 30% of the credit available to you. Overuse of credit impacts your score. Maintaining credit use can help in improving scores.

  • Use old cards or accounts

You should avoid closing your old cards and accounts. Since you are already using these cards for a long time, it’s better to keep them used. This will help you build a good credit history.

  • Have proper credit max

If you wish to apply for a personal loan for low CIBIL score, you should have a proper credit mix. A proper weightage and mix of different credit options will help improve your credit score.

  • Limit the number of hard inquiries

Multiple credit applications lead to hard inquiries. The higher number of hard inquiries will increase the risk of low credit scores. It will reflect that you are dependent on debt more than income. Avoiding many hard inquiries quickly will help improve your credit score.

  • Consolidate your debts

If you have multiple debts, consolidate them. You can pay it off by using a personal loan. Keeping limited debts in your portfolio is always a wise decision to make.


A personal loan with low CIBIL score is hard but not impossible. You can still take the loan you need with proper planning and time. You should always look for alternatives or solutions in such cases.

The best is always to improve the CIBIL score. Simple tips can easily improve your credit score. Building a good credit habit is indeed the key to your problem. Maintain a good credit mix and avoid overspending to start with. This will improve your credit score.

Also, you can visit Piramal Finance to apply for a personal loan for low CIBIL score. It’s a quick, simple, and efficient process that will save you time and offer you the funds needed.