How to get a Personal Loan when you have a bad CIBIL score

Lenders measure your ability to repay a loan by checking your credit score. This score summarises your credit history, the amount of credit you have taken, how you have repaid it, and other factors. All this helps a lender determine if granting you a personal loan is a risky proposition or not, since a personal loan is an unsecured loan and the lender has no other assets to fall back on.

While you may have heard that you cannot get a personal loan with a bad CIBIL score, this isn't entirely true. Here are the measures that you should implement to get a personal loan despite a poor CIBIL score.

Prove that your income can support EMI payments

If you have received an increase in your salary or have an additional source of income, a lender may consider your application for a personal loan even if you have a low credit score. If you can communicate to the lender that you have a stable job and steady income, they are more likely to grant you the loan despite a poor CIBIL score. However, you may have to pay a higher interest rate when you prove your eligibility in this manner.

Additional Read: What is annual percentage rate (APR): Understanding how APR is calculated

Ask for a lower personal loan amount

Asking for a high amount with a low credit score only indicates more risk to the lender. From a lender’s point of view, these are indicators that you may default on repayment. Suppose you apply for a lower amount of a personal loan. In that case, a lender may feel more comfortable granting the loan to you, as a lower amount is easier to repay.

Additional Read: Personal loan up to Rs. 40 lakh - only with Bajaj Finserv

Apply with a co-applicant or secure a guarantor

In case your CIBIL credit score is low, you can avail of a personal loan by involving a co-applicant or a guarantor. Of course, you will need to ask the other applicant beforehand, as they will have to complete KYC formalities and provide signatures too. The key benefit here is that if your lender finds the co-applicant or guarantor to have a steady income and a better credit score, they are certainly more likely to grant you a personal loan.

Correct mistakes in your credit report

Your CIBIL report may contain errors. This is usually when the latest information hasn’t been updated against your record. Mistakes like these can take a toll on your credit score through no fault of yours. So, it is essential to check your CIBIL report for free regularly and correct it if needed. This will boost your credit score and make you a better candidate for the loan.

Your CIBIL Score is made up of four factors and each of them have a weightage.

Additional Read: What is compound interest and simple interest: How to calculate it

Request your lender to consider your case with a NA or NH in your credit report

The NA or NH on your credit report marks the absence of any previous credit activity or lack of credit in the last 36 months. In such a case, you may not have a credit score in your CIBIL report. So, you can try and speak to your lender regarding your credit inactivity. The lender will likely offer you this loan at a slightly high rate of interest.

Additional Read: Personal Loan for CIBIL Score of 550-600

These measures will help you avail of a personal loan despite a poor CIBIL score. However, make sure that you have sufficient funds for repayment. If not, your credit score will plummet further. For this, you can use the Personal Loan EMI Calculator to know your EMI well in advance and plan your repayment accordingly. As a last resort, you can check to see if you can pledge assets such as jewellery or property to get a personal loan.

Additional Read: How to get an instant personal loan

Applying for a personal loan from Bajaj Finserv is easy, with exclusive pre-approved offers that are tailored to your unique repayment capacity. You can check your personal loan pre-approved offer by simply adding some basic details to get funds in just 24 hours.