Worried About Poor Credit Score? Eight Ways You Can Still Get Loan
Even with a low CIBIL score, you can explore multiple alternative routes to secure a loan, but the lenders may levy higher interest rates.
Are you worried about the lack of access to new loans due to a poor credit score? You’re not alone and all is not lost. When lenders review your application, the first thing they want to know is if you can repay the loan. To figure that out, they look at your monthly income, job stability and most importantly, your credit score.
The credit score, a three-digit number ranging from 300 to 900, gives them a peek into how well you’ve managed credit in the past.
If your CIBIL score is below 650, it’s considered poor and may limit your borrowing options. However, with a low credit score, there are still several ways to improve your chances of availing a personal loan. Though many banks and non-banking financial companies (NBFCs) are offering personal loans to borrowers with low credit scores, they may levy a higher interest rate.
Let’s explore a few ways to get a loan when your credit score isn’t in your favour.
1) Apply For A Secured Loan
One of the easiest ways to get a loan with a bad credit score is to offer collateral. Secured loans like gold loans, FD-linked loans, or loans against property reduce the risk for lenders. You can easily get approval for a personal loan when you mortgage any asset.
2) Get A Co-Applicant
Adding a co-applicant, especially someone with a strong credit history, can improve your chances of loan approval. The lender will consider the co-applicant's CIBIL score and income, which can make approval more likely.
3) Show Proof Of Income Stability
Even with a poor credit score, lenders may be willing to consider your application if you can show a stable income and consistent job history. Submit salary slips, bank statements and employment letters to support your case.
4) Apply For A Lower Loan Amount
Lenders are more likely to approve a smaller loan amount for applicants with bad credit. Keep your request modest and increase your chances of getting the money you need.
5) Correct Errors In Your CIBIL Report
Sometimes, a poor credit score could be due to mistakes in your CIBIL report. Check your credit report for errors like incorrect account information, outdated repayments, or wrongly reported defaults. Dispute these errors to improve your score.
6) Offer A Higher Down Payment (For Vehicle Or Home Loans)
If you're applying for a car or home loan, offering a higher down payment reduces the loan amount and the risk for the lender. This improves the chance of approval even with a low score.
7) Negotiate With Your Lender
If you have an existing relationship with a bank, such as a savings account or a previous loan, use it to your advantage. Sometimes, banks may overlook a low CIBIL score for loyal customers or offer special schemes.
8) Work On Your Credit Score Before You Apply
If you're not in a rush, take some time to improve your credit score. Start by clearing as much existing debt as you can and make sure all your bills and EMIs are paid on time. A better credit history can help you qualify for loans at lower interest rates.
Overall, a poor credit score can be a hurdle, but it doesn’t mean you’re out of options. With the right strategy and a few simple steps, you can still find ways to get the financial help you need.
