Availing a loan is a convenient way to achieve important goals like buying a home, purchasing a sedan or paying for your child’s higher education fees. Further, a loan also helps you meet unplanned expenses, be it for repairing the roof of your home or footing a large medical bill. However, before approving your loan, your lender assesses your creditworthiness by checking your CIBIL score.
A good credit score normally leads to quick approval and disbursal and even puts some negotiating power in your hands. In contrast, loans for people with poor credit can be difficult to obtain and tend to come at the expense of higher interest rates. Similarly, when in need of quick loans, bad credit can be a hindrance as application procedures for low CIBIL scores are more exacting.
So, does this mean that a lender will not offer a loan for low CIBIL score applicants? Not exactly. You may have a few hurdles to jump over when trying to get a loan with bad credit. So, if you are wondering ‘How can I borrow money with bad credit?’, here are some pointers that will answer your question.
What Is A Credit Score?
A credit or CIBIL score is a metric, a 3-digit figure ranging from 300 to 900, which summarises your credit history. The credit authority, CIBIL, evaluates parameters such as your debt repayments, the quantum and type of debt you have handled in the past and also your credit utilisation behaviour to give you a score. Other reputed credit bureaus also analyse similar parameters to assign scores based on their unique scale. However, TransUnion CIBIL is the most reputed among all of them.
Importance Of A Credit Score For A Loan
Your CIBIL score speaks for your diligence with debt repayments and so, a high score implies that you will handle a loan responsibly. Similarly, when lenders approve bad credit loans, monthly payments or EMIs may be inconsistent, and so, they are likely to hike the interest rates to offset the risks involved. The higher your CIBIL score, the better are your chances of getting a loan on favourable terms. The lower your CIBIL score, the tougher it is to get a loan and, the terms tend to be pocket-heavy, even with the best loans for bad credit.
Finally, when you make an application for a loan for a low CIBIL score, your lender is aware of your propensity to default and this can reflect in the form of a lower sanction or even a rejection of your loan application. So, look for ways to improve your CIBIL score before you apply for a loan.
How To Improve Credit Score?
If you are wondering how to increase CIBIL score, consider implementing these strategies.
- Manage multiple credit cards wisely. Too many cards with loads of dues will indicate that you as credit hungry. If you use them well, they can speak for your financial responsibility.
- Pay credit card bills on time and in full as failure to do so attracts interest and can lead to large amounts of unpaid debt.
- Service loan EMIs faithfully and if necessary, consider consolidating your debt and refinancing it via a more economical loan.
- Check your credit report and scrutinise it for errors. Rectifying mistakes will boost your score quickly.
- Avoid making multiple loan applications all at once as your score tends to drop by a few points each time a lender incites a hard inquiry into your report
Ways To Get A Loan With A Bad Credit Score
Quick fixes for credit scores are not easy to find and this can prove to be a hindrance, especially when you need a loan fast with bad credit. However, there are a handful of measures you can have recourse to. Here’s how to get a loan with bad credit.
- Apply with an NBFC as they have lenient lending guidelines. So, you may get access to a range of online loans for bad credit when you avail a loan via non-banking financier.
- Disclose all your sources of income including interest earned from deposits, rent, and investments as these speak for your ability to repay the loan.
- Make a joint loan application with a creditworthy individual. A larger pool of money supporting your EMIs and the reassurance of repayment can lead to a quick approval.
- Offer an asset as security. This reduces the value placed on your CIBIL score as the lender now has means to recover funds. For instance, a loan against property with bad CIBIL score makes for a viable combination as the high-value asset greatly reduces the risks involved in borrowing.
One feature-rich offering in the market at present is the Bajaj Housing Finance Limited Loan Against Property. It offers a high sanction of up to Rs. 3.5 crore at a nominal rate and for a flexible tenor that spans up to 20 years. Further, you also benefit from simple eligibility terms, minimal documentation requirements and a quick, 3-day approval!
Now that you have the answer to your question, ‘How can I borrow money with bad credit?’ go ahead and apply for this Loan Against Property. To get started, check your pre-approved offer and access instant financing. All you have to do is submit your name and contact details. So, worry less about a low credit score and apply for a feature-rich loan today!
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