When applying for a personal loan, lenders typically look at your CIBIL score first. When an applicant applies for a personal loan without pay evidence or a salary slip, a good CIBIL score can help them meet the qualifying requirements. It should go without saying that the CIBIL score is critical for anyone seeking financial assistance. The CIBIL score determines an individual’s creditworthiness, which is important when applying for an unsecured loan like a personal loan. Getting an instant loan without a CIBIL score is now achievable, thanks to an increasing number of financial institutions offering new programmes and incentives to make financial services more accessible to individuals.
What is a CIBIL score, and how do you get one?
Lenders analyze your three-digit credit score before approving your loan application when you apply for any loan. This is used to determine whether the borrower has the ability to repay the loan amount within the loan tenure. Credit Information Bureau Limited, or CIBIL, is a credit bureau that keeps track of data such as credit histories for both individuals and corporations. CIBIL receives credit data from banks and financial entities. A CIBIL score for a specific person is calculated using this information. Lenders use this score to analyze a borrower’s CIBIL score for instant loan or his credit worthiness before making a loan offer.
What is a poor CIBIL score?
The CIBIL score is a number that ranges from 300 to 900. Typically, a credit score between 300 and 650 is considered a bad or poor CIBIL score. Individuals with credit scores between 750 and 900 are more likely to get approved for a loan. Your credit score is determined by your repayment history, credit card usage (high credit card usage lowers your score), the number of times you apply for a loan, loans for various purposes (helps improve your CIBIL score), and other factors.
What does a low or nil CIBIL score signify?
A CIBIL or credit score of 750 or higher is regarded as good, while a score of less than 600 is considered bad. Because personal loans are unsecured and do not require collateral, they pose a higher risk to the lender. Banks and NBFCs are hesitant to lend to people in this group, and even if they do, the interest rate could be 0.5 percent to 2% higher. A good credit score, on the other hand, demonstrates a history of timely payments and is a testimonial to an individual’s creditworthiness. So, you’re probably thinking how to acquire a quick loan with no credit check. It’s challenging, but not impossible. Continue reading to learn how.
Go for a joint loan– You can apply for a joint loan without a CIBIL score if your spouse has a good score. When one applies for a joint loan, the CIBIL score of both applicants is taken into consideration. Another option to avail a loan without a CIBIL score is to take it in your spouse’s name. You’ll be able to get larger loans, such as a home loan, without a good CIBIL score and at the best interest rates this way.
Look for a gurantor– If you need a long or short-term loan but don’t have a CIBIL score because you don’t have any credit history, you can ask a member of your immediate family, such as your parents or a sibling, to act as a guarantor. You must, however, guarantee that the person acting as guarantor has a solid credit score. This is the most typical approach for persons without a CIBIL background to apply for education or a personal loan.
Put up collateral- Offering the lender collateral in exchange for the money is one of the greatest ways to secure a personal loan without a CIBIL and income verification. In India, the most prevalent form of collateral used by applicants seeking a fast loan without a CIBIL check is gold. Gold loans have been quite popular in recent years, and because the money can be used for anything, an increasing number of individuals are opting for this form of quick loan. Without the CIBIL score, the collateral serves as security to protect the lender from default. You can put up any asset, such as land, a vehicle (not already hypothecated under a separate loan), gold, and so on, depending on your needs.
Proof of income- It’s possible that your CIBIL score is low as a result of a credit report inaccuracy. By writing to the credit bureau, you can correct them. If you need a personal loan right away, though, you can utilize your income proof to receive one. When accepting loan applications, some lenders favour applicants with a fixed monthly income even though their CIBIL score is poor. There may be drawbacks, such as higher interest rates and smaller loan amounts.
Opt for a lower loan amount– Your application may be refused if you don’t have a credit history and are requesting a larger loan amount. To be on the safe side, apply for a smaller sum, such as Rs. 50,000 to Rs. 1 lakh. If you have a consistent monthly or annual income, your loan application may be accepted. Typically, lenders do not view applications for lesser loan amounts as a danger. When you ask for a larger loan, lenders begin to scrutinize and probe deeper into your CIBIL score.
Reasons for low CIBIL score are-
- Skipped EMIs
- Multiple loan applications at a time
- Poor credit score report
- High credit utilization ratio
Tips to improve your CIBIL score
- Pay your EMIs on time
- Maintain a healthy credit utilization ratio
- Keep a record of your credit score report timely
Having a low or zero CIBIL score is always a disadvantage. So, the best practice is to improve your credit score and get it closer to 750. It would be easier to get an instant loan if you have an above-average credit score.