Given the multiple purposes that personal loans serve, the demand for personal loans is increasing every day. However, there are crucial factors involved in the process of taking personal loans that every borrower must be aware of. Multiple steps are involved in the process; from the first step of doing a CIBIL score check to the last stage of getting approval for a personal loan.
Your credit score is the most critical and decisive factor in your loan application. In this article, you will find everything you need to know about your credit score and personal information, along with ways how to improve CIBIL score.
What Is A Personal Loan?
You can avail of a personal loan for several reasons. A personal loan is easier to avail because there is no requirement for collateral, and there aren’t many restrictions on how you can use the money. The best thing about personal loans in this situation is that you can use them for various causes, including weddings, vacations, gadget purchases, home renovations, medical expenses, and more.
Before requesting a personal loan, you must know your credit score. You can perform a CIBIL score check to know the credit score, which is an important factor in deciding the loan approval.
What Can Be A Good Credit Score For A Personal Loan?
A good credit score helps take all types of loans, but it is crucial for personal loans. It is because personal loans are significantly riskier than other loans like car loans, home loans, and education loans. When compared to other loans, they also require the fewest documents.
Credit score websites can help you know your score using the CIBIL score check option. It is best to have a credit score above 750 for a personal loan. If your credit score is above 825, you are practically guaranteed to get a personal loan, but there are several other things to take into account.
Can You Avail A Personal Loan With A Low CIBIL Score?
The minimum credit score for getting a personal loan should be between 720 and 750. Getting the loan you want is challenging but not impossible if your credit score falls in this range. However, for quicker and simpler access to your desired personal loans, it would be best if you consistently try to maintain a credit score above this range.
What Measures Can You Adopt To Get A Personal Loan With A Low CIBIL score?
If, after doing an online CIBIL score check, you find that you have a low credit score, don’t get discouraged. You can still get a personal loan if you adopt the following measures:
1) You need to show that your income can afford that personal loan:
Even with a low CIBIL score, the lender is more likely to approve you for a loan if you can convince them that you have a reliable source of income and employment. When you demonstrate your eligibility in this way, you might be required to pay a higher interest rate.
2) Apply for a loan amount that your income can manage:
This is a very basic requirement in every loan application. However, applying for a personal loan with a low credit score becomes especially crucial. That is because of the nature of personal loans and, of course, your low credit score. When you ask for a low amount, a lender might be more willing to approve your loan application because a smaller loan amount is simpler to repay.
3) Apply with a co-applicant:
A co-applicant or guarantor can help you get a personal loan if your CIBIL credit score is low. The main advantage in this situation is that your lender will be much more likely to approve you for a personal loan if they discover that the co-applicant or guarantor has a reliable income and a higher credit score.
4) Update your credit reports:
Your credit score might be hit due to arithmetic or factual errors. Therefore, it is crucial to regularly check your free CIBIL report and make any necessary corrections.
Thus, it is not impossible to get a personal loan with a low CIBIL score. If you follow the above measures, you can also avail a personal loan, no matter what your credit numbers are!