How Can CIBIL Defaulters Apply for an Urgent Loan?

Paying your credit card bills and loan Equated Monthly Instalments (EMIs) on time impact your credit score positively. However, if you forget to make timely payments, defaults will be mentioned in your credit report. 

Your Credit Information Bureau India Limited (CIBIL) score will start falling if you default on your dues and lenders may reject your loan or credit card application.

A default on debt happens when you fail to repay the funds according to the initial agreement with the lender. With most consumer loans, this happens when you miss multiple payments for several weeks or months in a row.

So, what happens if you have defaulted on your past repayments and now want a new loan?

Here, we have explained how a CIBIL defaulter can get an urgent loan and what are other options available to them.

Firstly, it is important to understand that there is no technical term called CIBIL Defaulter. This term is wrongly used for individuals who have poor credit scores due to their past EMI or credit card bill defaults. 

As credit score is one of the first filters that lenders use for evaluating personal loan applicants, individuals with low credit scores due to their past payment defaults have poor chances of availing of personal loans. 

If you are stuck in such a situation, worry not! The tips mentioned below might be helpful if you are seeking an urgent personal loan with a poor credit score.

Nowadays some Non-Banking Financial Companies (NBFCs) and digital fintech lenders offer personal loans to applicants with poor credit scores. However, these loans are often offered at higher interest rates to compensate for the higher credit risk associated with such applicants. 

Individuals having unreliable credit scores should widen their search for availing loans and the best way to do so is by visiting online financial markets like MyMoneyMantra. We offer personal loan options from a wide range of lenders, including digital enders, based on the applicant’s credit score, income and other eligibility criteria.

A good employment record and a high-income profile can reduce the impact of a poor credit score on loan. Apart from the CIBIL score, lenders also consider other factors, such as the applicant’s repayment capacity, job stability, employer’s profile, etc. while evaluating their personal loan applications. 

Thus, applicants working with government, public sector undertakings (PSUs), multinational companies (MNCs) and top-rated private sector firms are usually preferred by the lenders due to their income certainty and job stability. 

There are other options for CIBIL defaulters to get an instant loan as mentioned below:

• Apply with a co-applicant: Adding an earning spouse, parent or sibling as a co-applicant reduces the credit risk for the lenders as the co-applicant is equally liable for the timely repayment of the loan. Hence, it is a great idea to add a co-applicant having a good credit score and sufficient monthly income to increase your chances of availing a personal loan. 
• Add a guarantor: Just like a co-applicant, adding a loan guarantor reduces the credit risk for the loan providers as the guarantor also becomes responsible for repaying the loan in case of loan default by the primary applicant and co-applicants 
• Good salary: If you currently have a good income, your repayment capacity might have improved. This can help you gather approval on your loan application irrespective of your CIBIL score.
• Loans by NBFCs: There are few organizations that provide credit to individuals with low CIBIL scores. However, these loans come with higher interest rates.
• Peer to Peer borrowing: This is quite a good practice abroad and is being applied in India gradually. However, the rate of interest on such loans is very high and the amount is usually smaller.
• Opt for loans from digital lenders: Another option for CIBIL defaulters is to avail of a loan from online lenders such as Moneyview, MoneyTap, KreditBee, etc. These lenders are more lenient in the disbursement of loans than traditional lenders and have different credit models and interest rates.
• Apply for a secured loan: In case you are still unable to get a personal loan due to a low credit score, you can consider secured loan options offered by various lenders. As these loans are secured against collateral, they have lower credit risk for the lenders because they can sell the pledged collateral in case of loan default. This security helps lenders to put lower emphasis on the borrower’s credit score while evaluating the loan application. 

The secured loan options for low-score applicants are mentioned below:

• Loan against property: If you own a residential or commercial property, you can opt for a loan against property to meet your financial requirements. This loan option is especially helpful for those who are looking for a bigger loan amount and longer tenure.
• Gold loans: These are personal loans offered against the value of gold ornaments or coins. The lenders offering Gold loans do not consider the credit score of the applicants. Therefore, applicants with poor credit scores can mortgage their gold jewellery to lenders as collateral to avail of a gold loan.
• Loan against securities: If you invest in mutual funds, insurance policies, shares, debentures, fixed/recurring deposits, ETF, etc., you can leverage these securities to avail of loans. The loan amount offered depends on Loan to Value (LTV) ratios of securities set by the lenders.
• Work on improving your credit score: Last but not the least, you must take steps to improve your credit score by clearing your past debts and making timely repayments.

Frequently Ask Questions (FAQs)

Does CIBIL reset credit record after 7 years?

CIBIL gathers and syncs all information to make a uniform Credit Information Report having an individual's details of credit and defaults. This record stays with them for at least 7 years from the date of the first late report. CIBIL cannot delete or modify your credit records.

What are the urgent loan options for CIBIL defaulters in India?

The options of an urgent loan for CIBIL defaulters include secured loans and loans from online lenders or NBFCs.

What to do to get an extreme urgent loan for CIBIL defaulters?

To get extreme urgent loan for CIBIL defaulters, you can consider taking a loan from NBFCs or online lenders. You can also opt for secured loans. These are the best loan for CIBIL defaulters. 

Which bank provides personal loans for CIBIL defaulters?

Usually, traditional banks do not offer personal loans to loan defaulters in India due to higher credit risk. However, to get an instant loan for CIBIL defaulters, you can opt for secured loans from banks.