Low CIBIL Score? Here’s how you can get a Personal Loan anyway


23 February 2022

Low CIBIL Score? Here’s how you can get a Personal Loan anyway

Today, we rely heavily on loans from financial institutions to enable our goals and aspirations in becoming a reality – be it in the case of a wedding, an exotic travel plan (okay, not in 2020), or even buying a house or a car. And it’s these aspirations that often remind us of the criticality of our CIBIL score, or credit score. Like it or not, our understanding of how the CIBIl score works are crucial if we desire the process of taking a personal loan to be made easier.

So what exactly is a CIBIL score?

A CIBIL score can essentially be understood as a 3 digit numeric representation of your creditworthiness, ranging from 300 to 900 (check your credit score here). With the promulgation of the Credit Companies (Regulations) Act in the year 2005, 4 specialized agencies were created to assess each and every borrower based on all their credit activities in the past and assign them a credit score. As of now, there are 4 such institutions in India out of which the most heavily relied upon and popular one is the Credit Information Bureau (India) Limited (now changed to TransUnion CIBIL Limited), popularly known as CIBIL or Credit Bureau. 

A CIBIL score, plainly speaking, is based upon all the individual’s credit payment history across every type of loan by every kind of financial institution. However, it does not take into account any individual savings or investments. 

How is the CIBIL score associated with availing of personal loans? 

To prevent any banking frauds and to ensure repayment of loans by the borrowers, by the promulgation of Credit Companies (Regulations) Act in 2005, the government gave importance to individuals’ credit history. Further, the RBI has issued guidelines to the effect that no loan or other forms of credit should be given without evaluation of the individual’s CIBIL score. 

The closer your CIBIL score is to 900, the easier it becomes to avail a personal loan as it signifies your credibility as a borrower. Conversely, a low CIBIL score signifies poor money management, chances of loan repayment default, or a general position of unreliability as a borrower. In the case of a personal loan, the CIBIL score plays a pivotal role as it helps in the approval of the loan and plays a major role in determining the interest rate and period of repayment, among other things.  It is, however, possible to improve your credit score.

To know what your CIBIL score says about you, read our earlier blog here

Factors which affect the CIBIL Score 

Several factors affect your CIBIL score, which consequently affects your chances of availing a personal loan. The factors include:

  • Previous delay in repayment of the loan 
  • Loan default
  • Pending credit card bills 
  • Multiple applications for credit in the form of loans or credit cards 
  • More reliance on unsecured loans 

These are just a few of the factors which can affect your CIBIL score. To know more, take a look at this post on factors affecting your CIBIL score.

CIBIL score, personal loan, credit score

Alternative Sources to get Personal Loans Without a Credit Score

If you have a low CIBIL score or do not have a CIBIL score at all due to being new to the credit market, fret not because it is still possible for you to avail a personal loan. With the advancement in the fintech sector, there are several ways by which you can avail a loan with a CIBIL score as well. They include:

  • Take evidence of your present sources of income 

Since the bank’s main concern is whether or not will an individual be able to repay the loan they are borrowing, it is advised that you take all the financial statements related to all of your sources of income. This will ensure the banks of your capacity to repay the loan despite a low CIBIL score and, therefore, may lead to your personal loan application’s approval. 

  • Move a joint application or apply with a guarantor 

Even if your individual CIBIL score is low, your loan application can be approved in case you get a reliable and credible guarantor or joint applicant. This gives banks some sense of assurance concerning the repayment, and hence the approval of the personal loan can become easier. 

  • Do not move multiple applications 

In a frenzied fit, do not apply at multiple banks for the loan as the same reflects poorly on your CIBIL score. Also, try not to resort to personal loans at the drop of your hat, as the same can be detrimental to your CIBIL score in case of default or rejection of the application. 

  • Take steps to improve your CIBIL score 

Having a good CIBIL score can go a long way in helping you secure easier and cheaper personal loans. It does not have to be any drastic step, but even small changes can help improve your score. Some things you can do, for instance, is don’t change your credit card frequently or to keep reviewing your CIBIL report periodically for inaccuracies. To know more about how to improve your CIBIL score in 5 easy steps, refer to our earlier blog here.

  • Take a loan from a Non-financial Banking company 

Taking a loan from an NFBC is much simpler than taking it from a commercial bank. A lot of NBFC have no paperwork and instant personal loan disbursement and do not even have to take into account the CIBIL score.  For instance, EarlySalary offers instant personal loan disbursement upto 5 lacs directly into your account. It does not even take into account your CIBIL score. 

Where are you heading for loans?

At EarlySalary, we are aimed at meeting all your financial requirements with simply a click. Despite having no or low CIBIL score, the process of availing of a personal loan is easy, fast, and paperless. To know how to get a personal loan in less than 5 minutes, click here.
The eligibility criteria for the loan are also reasonably simple. So, to know more, click here and get an instant personal loan at the drop of your hat.  

Feel free to contact us for any questions on credit, loans, and your instant cash needs! We are here:
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