- July 1, 2020
- Posted by: Ganeshcbani
- Category: Blog
There are a number of options available when it comes to getting a personal loan with poor credit. You can try searching online or contacting a number of lenders directly. Once you have a list of potential lenders, it’s time to start the application process.
Personal loan with Poor Credit
During the case of a financial disaster, a personal loan is a great support. But not everyone can be eligible for a personal loan since a number of checks are required before the bank decides to grant a loan or not. Among the first things that the lender looks at is the CIBIL Score or Credit Score. So, does this mean that Bad CIBIL Score individuals can not obtain a personal loan? No. A personal loan with a low CIBIL score can be obtained. Let us know more about the CIBIL score and how it affects your eligibility for loans.
What is the CIBIL value essential for personal loans?
CIBIL Score is relevant not only for a personal loan but also for any form of loan or credit card. This is the rate of the creditworthiness and, thus, it is the first thing banks are looking at when they are finding a loan. It’s only part of your pre-screening, which means the lenders are looking at the CIBIL score, but not only because of a bad score. A variety of other factors contribute to deciding whether or not you are eligible for a loan.
The following are some things you should consider when applying for a personal loan:
Before submitting the submission, you can test CIBIL Score. When you have a poor score (less than 600), you better start working on it through daily EMI payments and don’t miss any due dates. A few months will be needed to restore the ranking, but it would definitely improve your chances of acceptance.
Until applying for a personal loan, check whether you meet the requirements for eligibility set by a specific bank. A credit score is essential, but there are other basic criteria that you need to meet to apply for the loan. See if your area comes under the control of the bank; see if your business is on the list.
When you have an outstanding credit score, you have the ability to browse for competitive interest rates. So don’t take the first offer you get. Negotiate with the bank to reach a lower interest rate. Your bargaining power would be stronger.
As already stated, CIBIL Score is one of the first items the banks consider to pre-screen the applicant for a loan. You must check that you meet the fundamental requirements for age, residential status, jobs etc. along with the credit score. Even if you have a low CIBIL score and everything else checks out, you can still get approval. You will not have personal loans at the best interest rate if you have a poor score. At the other hand, applicants with strong ratings not only have better chances of acceptance but are also willing to shop around at low interest rates.
Why are the Poor CIBIL Rating Reasons?
A low CIBIL score can be due to the following reasons:
You are expected to pay the pre-decided amount in full, on time, if you take a loan or credit card. Your CIBIL score represents your history of payment. Therefore, if during the loan cycle you have missed payments or defaulted on your EMIs, your credit score certainly hit. And if you manage to skip payments many times, the ratings will decline significantly.
Credit usage ratio
This is the ratio of your credit balance to the total credit limit that you have been allocated. A higher ratio indicates that you have used the available loan with great caution and makes your future loans a hungry borrower. In the other side, if you achieve a loan utilization ratio of 30% or less, that would put you in the lender ‘s eyes as responsible borrower. Your CIBIL score would be better for reducing the consumption ratio.
When you have a single form of credit account, the score will not be as good as a combination of different credits. A successful combination is one that has different forms of credit accounts that are both safe and unsecured. Visa cards, personal loans , home loans , car loans and other things in your credit account can contribute to a very good credit score.
The CIBIL score decreases with each hard inquiry started on the credit profile. This is why financial experts often recommend that they should not apply for so many loans or credit cards concurrently. There should be a gap between two applications of at least six months in order for your credit score to be repaired.
There are a few things you can do to improve your credit score before applying for a personal loan. First, make sure you’re using your credit cards responsibly and in line with your debt limit. Second, keep up on your payments and stay current on your loans. Finally, if you have a ton of outstanding debt but a good credit score, consider borrowing money through a secured loan instead of an unsecured one.