Ways to Get an Urgent Loan with a Low CIBIL Score

When assessing a personal loan application, lenders consider several factors, including your income, repayment history, and credit score. Having a good credit history and a high CIBIL score would increase.

What is a CIBIL Score?

Your CIBIL score, also referred to as a credit score, is a three-digit numeric representation of your creditworthiness. This score is calculated by the Credit Information Bureau (India) Limited, or CIBIL. The CIBIL score ranges from 300 to 900, with higher scores indicating a more creditworthy borrower.

CIBIL Score Range and Loan Impact

A low CIBIL score, typically below 650, may make borrowing more difficult, but not entirely impossible. While lenders do put significant focus on credit scores when evaluating loan applications, they do consider other factors such as co-signers, collateral and income. Hence, if you urgently need funds, there can still be ways to secure a loan.

How To Get a Loan with a Low CIBIL Score?

Here are a few tips to get an urgent loan with low CIBIL score:

• Apply With a Co-Applicant: You should consider applying with a co-applicant who has a stable income and a high credit score. This would lower the risk of the lender, improve the chances of loan approval, and help you secure better interest rates and loan terms.

• Apply for a Smaller Loan Amount: For lenders, it is riskier to grant a larger loan amount to borrowers who have low CIBIL scores. Applying for a smaller amount can increase the chances of approval, as the lender’s risk will be lower.  

• Provide Collateral: Providing lenders with collateral, like property, gold or even fixed deposits, would lower their risk and improve your loan approval chances, even if your credit score is low. Secured loans, such as gold loans, typically come with competitive interest rates and better terms than personal loans.

• Present Robust Income Proof: Many lenders might overlook your low CIBIL score, as long as you currently have a stable monthly income.  Proof of steady employment or business revenue would demonstrate repayment ability and improve your chances of approval.

Tips To Boost Loan Eligibility in the Future

Anyone with low credit scores should take steps to improve their credit scores so that they are able to get loans easily down the line. Here are a few simple tips that can help improve your CIBIL score:

• Pay Your Bills and EMIs on Time: Paying your loan EMIs and credit card bills promptly would be of huge help in improving your credit score over time. You should consider setting reminders or automatic payments for bills to make sure that you don’t miss any important deadlines and guarantee regular on-time payments.

• Keep Your Credit Utilisation Low: The credit utilisation ratio refers to the percentage of credit you use from the overall limit available. For instance, if your credit limit is INR 100,000 and you have utilised INR 20,000, the credit utilisation ratio shall be 20%. A ratio of 30% or less is considered healthy and would contribute towards improving your credit score.

• Regularly Monitor Your Credit Report: Your credit score may suffer if there are any wrongly reported late payments or outstanding debts. Hence, you should obtain a free credit report from CIBIL and raise a dispute if you spot any inaccuracies.

Following the simple tips mentioned above would help you improve your credit score over time. While you can get an urgent loan with low CIBIL score as well, a higher score shall enable you to secure lower interest rates and better terms.

Author bio: The author is a financial consultant who has experience working in the industry for several years. In his free time, he likes to write and impart knowledge on financial services.