A non-banking financial institution (NBFC) is like your cool aunt — easy to deal with, has fewer restrictions, and offers you money at the end of a visit.
In other words, NBFCs are not constrained by the regulations that prevent traditional banks from freely handing out loans. For example, banks rely on CIBIL scores to assess an applicant’s creditworthiness. The application is instantly rejected if the individual does not meet the minimum credit score requirements.
An NBFC is a life-saver as it disburses instant loans even with no/low credit score. However, the loans come with certain conditions, such as high interest rates and short repayment periods, to compensate for the associated risks.
Keep reading to know how to get NBFC loans without a CIBIL score.
Importance of CIBIL score for NBFC loans
To be fair, having a good CIBIL score helps secure both NBFC and bank loans. We, too, recommend creating a good credit history before applying for loans. However, this is not possible for first-time borrowers.
First-time borrowers often have a credit score of 0 or -1. Just because it’s in the negative does not necessarily mean it’s bad.
0 Credit Score
A 0 credit score implies that the individual’s credit history is less than six months old. As a result, the credit reporting bureau lacks enough data to provide a credible score.
-1 Credit Score
On the other hand, a -1 credit score means that the individual has no credit account, meaning they have yet to take loans or credits from financial institutions.
NBFCs analyse the income statements of such individuals before approving their loans. Banks have the infrastructure to do the same but avoid it as they are inherently risk-averse.
Different Methods to Apply for Loans without CIBIL Score
NBFCs have flexible policies that help you bypass the CIBIL score requirement. In addition, first-time applicants also get some leeway while applying for online loans.
Here are 3 ways to successfully secure a loan.
1. Apply for a Small Loan Amount
Small loan amounts are best for first-time borrowers as they are easy to repay and are less risky for NBFCs. They easily approve smaller loan amounts even without a CIBIL score.
However, you need to opt for a secured loan by offering collateral if you want to borrow a larger amount. The loan amount is usually a percentage of the asset’s value and reduces the risk for lenders.
2. Apply with Guarantor
Applying with a guarantor or co-applicant is a surefire way to secure a loan. In such cases, the loan officers evaluate the guarantor’s profile and credit score before approving your loans.
But, remember, the co-applicant becomes liable to pay off the remaining loan amount in case of defaults.
Choose your partner, parent, spouse, sibling, or friend to become your co-applicant. Moreover, your co-applicants can negotiate for better terms if they already have a working relationship with the institution or a good CIBIL score.
3. Steady Income Proof
NBFCs overlook the credit score requirement if you furnish proof of steady income. Salary slips, tax returns, business income, and bank statements reflect your repayment capacity. Employment with MNCs and established companies also enhances your position as a borrower.
Documents Required to Apply for NBFC Loan without CIBIL
Applying for a loan without a CIBIL score is nerve-wracking. It feels like appearing for an exam without any preparation. But, it need not be the case.
Compiling all the essential documents before applying is sure to take some of the burden off your shoulders. Below, we provide a list of all the documents you require to apply for an NBFC loan.
For Salaried Individuals
Steps to Apply for Loans without CIBIL
For Self-Employed Individuals
Since most new-age NBFCs operate through online websites and apps, keep scanned copies of all your documents, including your passport-size photograph and signature, handy.
Steps to Apply for Loans without CIBIL
Take extra precautions while choosing an NBFC platform or moneylending mobile applications. Few dubious lending apps access your phone contacts and spam them with unnecessary text messages and calls about your loan repayment status.
Trust us, you do not want your high school Maths teacher to know about your repayment schedule.
So, here’s how you apply for NBFC loans without a CIBIL score.
- Research and shortlist NBFC platforms with no minimum CIBIL score requirements
- Create your profile on their website or mobile app
- Enter your personal details, like address, age and gender
- Enter professional information, such as employer’s name, and monthly income
- Choose the loan amount and term that you require
- Re-verify all the details
- Upload all the required documents through their portal
The financial institutions verify the documents within a few hours and instantly disburse the loan amount to your account.
A few established NBFCs have offline branches where you can apply for loans. Here’s how you do it.
- Visit your closest branch
- Contact the loan officer
- Fill out the application with all the necessary details
- Submit attested photocopies along with the application
The rest of the verification and disbursement process is the same as the online method.
Conclusion
Choosing the right NBFC platform is a tricky process. Even more so, when you have to filter out the suspicious moneylenders who want to defraud you. So, what do you do to make this process easy?
Simple, you choose Credmudra.
Credmudra is not a lender itself, but the online aggregator helps you find the best lenders based on your financial requirements. Credmudra works with multiple NBFCs that offer personal loans without CIBIL scores.
Furthermore, get connected with legitimate lenders who won’t misuse your credit score and other financial and sensitive information.
In addition, Credmudra:
- Goes beyond CIBIL scores and uses other data points to create a custom credit profile
- Offers pre-underwriting services to help people without a credit history
- Employs safeguards to protect the user’s privacy and data
- Addresses queries related to the lending process
In short, Credmudra makes loans accessible to everyone, even those without a credit history.
To avail your first loan, get started by signing up on Credmudra for free.
FAQs
1. How do you Maintain a CIBIL Score?
Follow the steps to maintain your CIBIL score.
- Make timely repayments
- Keep your overall credit utilisation ratio below 30%
- Do not make multiple loan inquiries in a short period
- Report any inaccuracies and incomplete credit details to CIBIL
2. Why has my CIBIL Score Gone Down?
CIBIL scores can go lower due to multiple factors.
- Multiple ongoing unsecured loans
- Credit utilisation over 30%
- Delays in EMI payments
- Loan defaults
- One-time settlements
- Multiple loan inquiries in a short time frame
- Multiple loan application rejections
3. Why is My CIBIL Score -1?
A CIBIL score is -1 when the individual has no credits or loans to their name.
4. Can I Get Personal Loans with No CIBIL Score?
Yes, you can get a personal loan with no CIBIL score. However, the lenders might charge a higher interest rate and offer smaller amounts to offset the risk. But, these conditions can be negotiated if you bring in a co-applicant or offer an asset as collateral.
5. What Factors Affect the CIBIL Score?
Repayment behaviour, foreclosures, credit utilisation ratio, and one-time settlements, all affect your CIBIL scores.