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Loan for Low Cibil Score

If you have a low CIBIL score can you still get a loan? Are loans for bad credit available? Can you get an Instant loan for low Cibil and how? Learn all about getting a loan even when you have a low credit score and how to make it possible. 

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Details About Loan for Low CIBIL Score

When you apply for a loan, the main thing that the lenders check is your CIBIL score. Your CIBIL score remains somewhere between 300 to 900. Even if you have a credit score of 700 and above, it is considered to be a decent credit score. However, if you have a credit score of 650 or less than that, you may have to face some issues to get personal and home loans. However, the fact that you cannot get loans with bad credit is not entirely true. Loans for bad credit are also available if you look harder. 

If you maintain a strategy and work on slowly improving your credit score, you can also take loans for bad credit as well. 

If you have a relatively low credit score and are wondering which loan plans are available that you can look for, we have got you covered. In the following paragraphs, we will thoroughly discuss how you can get a loan with your credit score, and how you can improve your credit score fast.

Also Read - Top 10 Factors Affecting Your CIBIL Score

How to get a loan on a low credit score?

If you're wondering how you can get decent loans with a low CIBIL score, you need to follow a few steps to make a financial strategy.

  • The first and foremost step that you need to do is do a lot of research regarding online loans for bad credit that you can apply for with your current credit score. Be aware of different kinds of loans offered by different banks and lenders across the country.
  • When you have a low credit score, do not apply for huge loan amounts. Your loan applications will not get approved when you apply for a bigger amount with a low credit score. When you apply for a huge amount with a low credit score, your lender will be put in a risky situation. If you apply for lower amounts, your potential lenders may feel comfortable approving your applications.
  • For emergency situations, look for urgent loans for bad credit. Apply for a comparatively lower amount to make sure your approval chances are on the higher side.
  • If you have recently got your salary increased or managed to have an additional source of income, convince your lender that despite a bad credit score, you will be able to repay the loan timely despite a bad credit score. If you can convince them that you have a stable job and a good income source, they might consider your loan application for further procedures.
  • When you look for loans for bad credit, you can also apply with a co-applicant. Ask them to complete KYC formalities and help them fill in the personal details. If your co-applicant has a good credit score, your lender will most probably consider your application.
  • Before applying for loans, make sure you check your credit report thoroughly. Constantly check your Cibil reports to avoid errors and inconveniences. Even if a single piece of data doesn't get updated on your report successfully, it can affect your CIBIL score immensely. Before applying for loans, make sure you check your credit report thoroughly.
  • Always go for small loans for bad credit when you don't have a decent credit score. 
  • In case you have NA or NH on your credit report, it means you don't have a valid credit history to consider for your loan application. In that case, try to communicate with your lender regarding the credit inactivity. They might offer you a loan with a moderately higher rate of interest.

How you can take out a loan for low CIBIL score mostly depends on your expertise to manage the situation. Convince your lender that you can make timely repayments. Explain why you have a slightly low credit score. 

Also Read - How to Remove Name from CIBIL Defaulters List?

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What are the Reasons for a Low CIBIL Score?

There are several reasons that affect your CIBIL score. Some of the major reasons due to which you may have a low CIBIL score are:

  1. Making late payments 

Make sure you pay your monthly bills, EMIs, and debts on time. If you keep making late payments, it will affect your Cibil score immensely. Even a single late payment can affect your score. Lenders often send out requests to credit agencies when you make late payments. It can have a permanent effect on your credit history.

        2. Closing old accounts

If you have had a long history of repayment, do not close that account. Keep your old accounts that have a good credit history as proof that you are a responsible borrower. It will show you as someone who can manage their finances well and can make smart decisions when it comes to expenses.

        3. Applying for multiple loans and credit cards 

Before you start looking for online loans for bad credit score, make sure you maintain at least a short span before applying for multiple credit cards. It can have a bad effect on your credit history. It shows that you are a desperate borrower who is not financially responsible.

        4. Over Utilisation of credit limit

If you keep spending more than 50% of your credit limit on a monthly basis, it will have a negative impact on your credit score. Keep your expenses within 30% of your credit limit to maintain a decent CIBIL score.

Make sure before you start looking for urgent loans for bad credit, you recognise the problems that are causing a bad credit score in the first place. It will help you analyse and improve your credit score in the long run.

Additional Reading: How to raise cibil dispute?

How CIBIL score affect eligibility for loans

Your CIBIL score has a huge role in determining whether or not you are eligible for applying for loans and credit cards.

Your creditworthiness is fully judged on the basis of your repayment history, your past lenders’ details, the duration of your past loans, whether or not you made late payments, and your personal details. These details are taken into consideration while preparing your CIBIL score. Keep checking at least a free credit score from time to time to make sure you have a decent credit score.

When you have a CIBIL score of 750 or above, lenders may offer pre-approved loan plans to you. Several rewards are also offered to you when you have an excellent CIBIL score.

Those who have a good credit score are more likely to receive loan plans with low-interest rates compared to those who have a credit score of 650 or less. 

When you have a good CIBIL score, it can help you with your Visa applications as well. Visa applications are more likely to get approved early when the applicants have a decent CIBIL score. Consider applying for small loans for bad credit if it is an emergency. Otherwise, increase your score first and then apply for loans to receive better loan plans.

You can also Check Cibil score by Pan Card

Personal Loan for Low CIBIL Score

Your CIBIL score for personal loan matters a lot when it comes to loan approvals. Even if you have a credit score of around 650 to 750, you can approach several institutes or banks for personal loans.

In case you have a lower credit score, the most important part is to convince your lender to grant you the loan. Appear as a responsible borrower who has a steady income source and a nice home. Provide documents as proof of filing taxes. Make sure you provide them with your bank records so that they trust you as a responsible borrower.

Check your free credit score more frequently. If it is on the lower side, explain why you have a bad repayment history and convince them that you will pay your monthly dues timely.

Look for online loans for bad credit and apply for the ones you think will fit your budget in the long run.

Also Read - CIBIL Score Required for HDFC & ICICI Personal Loan

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Eligibility for a Personal Loan with a Low CIBIL Score

If you have a low CIBIL score, the main factors that will be taken into consideration by your lender are your current bank balance, current income, tax reports, number of open credit accounts, reasons for bad credit history, and past employers’ details.

Use a CIBIL score calculator to frequently calculate your credit score before you go on to apply for a personal loan. Make sure you have a decent credit score to avoid inconveniences during the procedure.

Additional Reading: What is cibil grievance?

Home Loan for Low CIBIL Score

When it comes to CIBIL score for home loan, you have to provide your lender with the same details. Convince them why, despite a bad credit history, you are a trustworthy borrower.

Home loans are usually huge amounts offered by banks. Consider going for comparatively lower amounts. Convince the lender why you are a trustworthy borrower. Show them your income tax documents and current bank balance to help them consider you for the loan.

Online loans for bad credit are generally rare to find when it comes to home loans. However, do sufficient research before coming to a conclusion. Most importantly, never stop trying to improve your credit score. It is all that the lenders judge before they grant you a loan.

Also Read - How to Attain a Good CIBIL Score Always?

How to get a Credit Card for Low CIBIL Score

The requirement for CIBIL scores does not remain the same when it comes to different banks. Even with a high CIBIL score, some loan applications and credit card applications may get rejected due to banking relationships, income status, age, employment type, and other factors. Cibil score is not the only criteria you need to have to apply for credit cards.

However, if you want to get a credit card with a low CIBIL score, make sure you have a stable income and income tax documents as proof of your creditworthiness. Show your lender why you can be a responsible borrower of a credit card. Convince them that you will keep your expenses within 30% of your credit limits.

Tip - Check Cibil Score for Credit Card before applying.

How to improve your CIBIL score

Before you start looking for urgent loans for bad credit, make sure you spend some time analysing how you can improve your current CIBIL score. It will give you better deals and offer several benefits and rewards in the future.

  • If you keep spending more than 50% of your credit limit every month, it will show you as someone who can not manage their finances well. Limit your expenses and make sure you spend around 30% of your credit limit per month on maintaining a good CIBIL score.
  • Repay your dues, bills, EMIs, and debts properly on a monthly basis if you want to improve your CIBIL score. Those who have an outstanding credit score of 750- 900 make sure they pay their credit bills on time. Do not make late payments, for it can badly affect your CIBIL score.
  • Do not apply for multiple credit cards. Make sure you maintain a gap before applying for multiple credit cards. 
  • You must keep a track of your credit report. Many customers have errors in their credit reports at times. Make sure you keep checking your credit history to avoid such inconveniences.
  • Make sure you keep your old good loan accounts on your credit report. It will help you achieve a good credit score fast. Keep your good accounts active if you have a good repayment history for a long time.
  • Increase your credit limit to lower your credit utilisation reports in the long run. It will make your CIBIL reports better.

Also Read - How to Improve your CIBIL Score after a Loan Settlement?

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FAQs

✅What is the minimum CIBIL score I need to avail myself of a personal loan?

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The minimum CIBIL score that you need to have to avail of a personal loan remains around 700 to 750.

✅How do I check my CIBIL score?

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Head to the official page of the CIBIL company (www.cibil.com). Put all the necessary information such as your name, email ID, phone number, address, bank account details, and other details to check your Cibil score successfully.

✅What benefits will I get if I have a good CIBIL score?

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You may receive pre-approved loans if you have a good credit score. You will be asked to pay lower interest rates compared to those who have lower credit scores.

You will also receive several additional rewards and benefits if you have a good credit score.

✅How can I get a loan with poor credit?

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Make sure you have a good bank balance, a stable source of income, and necessary tax documents to convince your potential lender.

You can also consider applying with a co-applicant who has a good credit score if you are looking for loans for bad credit.

✅What is the lowest credit you can have to get a loan?

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Even if you have a credit score of 650, you can approach banks and individual lenders for a loan. You need to work on improving your credit score if you have a credit score less than that.

✅How is the CIBIL score calculated?

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CIBIL score is calculated with the help of a few metrics and factors. Your credit history is taken into consideration during the process.

Your repayment history, past lenders’ details, personal information, credit bank accounts, and other details are thoroughly examined as a result of this procedure.

✅Can I get a personal loan for a CIBIL score of 550?

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You can look for small loans for bad credit if you have a credit score less than 600. 

However, the best thing for you would be to work on improving your credit score before applying for loans if you have the time.

✅Will interest rates be high if I apply for a personal loan while having a low CIBIL score?

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Yes. When you have a low CIBIL score, your interest rates will be higher than those who have a comparatively higher CIBIL score.