How to Get a Personal Loan for Low Credit without Guarantor?
The credit score is one of the key determinants for personal loan approval. Financial institutions look for a credit score above 750 to sanction these loans quickly to borrowers.
Individuals with poor credit score can choose to nominate a guarantor. In case a guarantor is not available, they can opt for other alternative measures to avail a personal loan without a guarantor.
Measures for No Guarantor Loans
Take the following measures if you have a low credit score and no guarantor –
- Apply with a co-applicant
A co-applicant can improve chances of loan approval if you have bad credit. It enhances your loan eligibility and reduces the risk of repayment default as your cumulative income increases.
- Show sufficient income
Provide relevant documents to your preferred financial institution to show that you have ample income to repay a loan without guarantor from a direct lender. A higher income supports your repayment capability and improves chances of approval. It plays a major role in determining the amount of credit you can avail as an instant personal loan.
- Opt for a lower loan amount
Apply for a lower loan amount for improved chances of approval when you hold a poor credit score. A high loan amount signifies a greater risk to the financial institution when you hold a low CIBIL score and can result in rejection of a loan application.
- Seek alternate lenders
Several financial institutions put considerable emphasis on credit score for no guarantor loan approvals. Refer to lenders who require only basic eligibility for approval of a personal loan without a guarantor.
- Improve credit score
A high credit score increases chances of loan approval, especially for unsecured loans such as personal loans. Consider taking measures that can improve your CIBIL score to increase your loan eligibility.
Ways to Improve Credit Score
Adopt the measures mentioned below to improve your credit score –
- Choose a longer tenor for loans
Opt for a longer tenor when you avail a loan to reduce the EMI amount and the chances of defaulting. It will lower the EMIs and ease the repayment procedure making it easier to repay the loans and improve your credit score.
- Do not apply for a loan with multiple financial institutions
Avoid applying for loans with different financial institutions at one time. When you apply for a loan, the lender inquires about your credit score from credit rating agencies. Every such enquiry negatively affects your score. Hence, if multiple financial institutions perform credit checks, your credit score is reduced significantly.
- Make repayments on time
Repay your dues such as credit card bills and loan EMIs on time to maintain an error-free repayment history and increase your CIBIL score over time.
- Lengthen credit history
Maintain your old credit cards to lengthen your credit history, which positively impacts your credit score.
- Maintain a low credit utilisation ratio
The credit utilisation ratio is a primary determiner of credit score. Avoid using more than 50% of your available credit limit to be considered as a less credit-hungry individual and improve your CIBIL score.
- Rectify mistakes in your credit report
Check if there are any discrepancies in your credit report and accordingly rectify them with the respective credit rating agency.
A credit score above 750 is essential to sanction personal loans without guarantor. You should be responsible with your credits to improve your CIBIL score to get increased chances of loan approval.