Get a Loan even with Low CIBIL Score: Know How
Before borrowers apply for a loan, they are advised to perform a credit score check online. Lenders require borrowers to have a credit score of 750 or above to be eligible for a loan. But, what does one do if their CIBIL score report shows a score below 750? Should a borrower not apply for a loan then? It is possible to avail of a loan even if your CIBIL score is low.
However, in this case, a borrower must be more cautious about how to tread with the loan application procedure. Here are a few tips that can help borrowers with low CIBIL score avail of a loan on good terms and conditions.
Apply for a Loan Amount Lower than You Are Eligible For
When you have a low CIBIL score, lenders doubt your ability to repay the loan. This is the reason loan applications from people with low credit scores get rejected. However, by applying for a loan amount lower than what you are eligible for, you can convince your lender of your ability to repay the loan.
Additionally, including all your income sources in your loan application can also help demonstrate your repayment capacity. If, upon availing of your CIBIL report online, you find that your credit score is below 750, it’s important to take steps to increase CIBIL score and improve your chances of loan approval by applying for a lower loan amount.
Apply With a Lender With Whom You Already Have a Loan Account
As mentioned before, when borrowers have a low CIBIL score, lenders deny their loan request because they doubt the borrower’s repayment capacity. However, when such a borrower applies with a bank or lender with whom they already have a loan account, they do not need to establish their creditworthiness as the lender already has an idea of it. Thus, in this case, even if the borrower’s CIBIL score is low, the lender approves their request for a loan.
Consider Adding a Co-Borrower
If your CIBIL score report looks bad, you can increase your chances of loan approval by adding a co-borrower to your loan application. However, this co-borrower must be someone with an excellent credit score and high repayment capacity. When two people apply for a loan together, lenders check their eligibility based on the combined income and credit score of both borrowers. In this particular case, a borrower with a low CIBIL score
Check Your CIBIL Report for Errors
Lastly, sometimes errors creep into a borrower’s CIBIL report and ruin their score. Credit Information Bureaus cannot rectify these errors as these mistakes are passed on to them from lenders. Therefore, borrowers must check their CIBIL score report for errors before applying for a loan.
If you see any mistakes, report them immediately. Rectified errors can take up to 60 days. Further, it takes a few more weeks for the rectifications to reflect on one’s credit rating. So, borrowers must check their CIBIL report from time to time, especially if their CIBIL score is low.
It is not impossible to avail of a loan with a low credit score. Following the above tips will certainly help.
