Having a good credit score is worth its weight in gold in today’s banking scenario. You see newspaper reports everyday about some of the biggest companies becoming NPAs (Non-Performing Assets). Under such circumstances, banks give a lot of preference to your credit scores while dealing with your loan applications.
It is an ironical situation. You need to have a good repayment record to achieve a good credit score. At the same time, you should have a good credit score to apply for a Personal Loan or any other loan. Do you feel like being sandwiched in a Catch 22 situation? In a way, it is true. However, there are ways by which you can get loans without having a credit score.
In this age of burgeoning NPAs, banks are on the lookout for good borrowers having a credit score in the range of 750 and above. They are ready to offer attractive discounts in interest rates to attract and retain such borrowers. Moreover, the introduction of the MCLR (marginal cost of funds based lending rate) concept has brought the marginal cost of borrowing into the equation. Banks need to be very careful with their risk-weighted assets figures. Hence, borrowers with good credit scores are always welcome.
Yes, you can take heart in the fact that it is possible for you to get loans in spite of not having a credit score. People feel that it is an impossible task, but it is not so. Yes, your credit score is an essential eligibility criterion. Nevertheless, other factors can work in your favour. Let us look at these aspects that can help you submit an Online Personal Loan Application without having a credit score.
The organisation where you work plays a vital role in your loan application. Banks, as well as NBFCs (Non-Banking Financial Companies), look at the status of your employer while processing your loans. If you belong to the Government sector or the PSUs, your chances of approval are the highest. It is because these employers are reputed. Also, you have stable employment when you work for the Government or the PSUs.
Banks have a specific listing of employers depending on their reputation in the market. They also give preference to the employees of corporate companies maintaining salary accounts with them.
If you are just out of college and wish to apply for a Personal Loan, the chances of rejection are high even if you work for an A-grade employer. At the same time, your chances increase if you have put in sufficient service for a B-grade employer. In short, the length of your employment and its continuity has an important bearing on the sanction of your loan.
Banks and NBFCs stipulate a minimum income criterion for approving your loans. One needs to have a minimum salary of 20,000 per month to be eligible for a Personal Loan. It is always better to approach the bank where your salary gets credited. Banks do not have to do much KYC formalities under such circumstances.
If you are applying for a loan for the first time, it is better to opt for a small amount. Banks usually offer up to 6 month’s salary as the initial Personal Loan. It is better to go for a 4-month salary loan limit, especially if you do not have a credit score.
The secured Credit Card is the best option available for first-time borrowers. It provides them with the best chance to build up their credit history and credit ratings.
Use these opportunities to build up a decent credit score before applying for the big loans.
Also Read: Tips to Balance Your Savings and Spending
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