The credit score summarises his credit history, which includes the amount of credit he has taken, how much he has paid back and many other factors. Generally, a Personal loan requires a good credit score of 700 or more to get a personal loan. A personal loan demands a credit score of 610 to 640 to get approved. Persons with credit scores more than this have chances to get personal loans with a lower interest rate. The reason why creditors look for a decent credit score is the risk factor involved in a personal loan. Most of these loans are unsecured. Therefore the creditor is left with no collateral to trade in case of default by the debtor.
The CIBIL credit score is fundamental and impacts a person’s eligibility for getting a personal loan or some other loan. But it is not true that a person with a poor CIBIL credit score cannot get a personal loan. Therefore, the borrower should implement some measures to get a personal loan despite a poor credit score.
Suppose there is an additional source of income for the personal loan application, or he has got a promotion with a salary hike. In that case, the creditor may consider the personal loan application even if the applicant does not have a good Credit score. On the other hand, if the creditor is convinced that the applicant has a stable job and steady income source, the personal loan application can get approved. But mainly, this attracts a higher rate of interest to be paid against the loan to prove eligibility.
An applicant with a poor credit history can apply for a lower amount of personal loan; if the creditor feels like granting the loan, the borrower has to pay a lower amount of EMIs, which can be calculated through a Personal Loan Calculator. A lower credit score indicates a risk to the lender, and therefore they do not sanction a higher amount of personal loan to the loan applicant. A lower credit score is an indicator of making default on repayment by the borrower.
Applying for a personal loan along with a co-applicant or a guarantor can help get the loan amount sanctioned if the applicant does not have a decent credit score. KYC formalities need to be completed to get a personal loan with the free consent of a co-applicant or guarantor. However, if the guarantor or the co-applicant have a good credit score and stable income, then there is a high probability that a loan application will be granted.
Many times it has been seen that the latest information on the credit report has not been updated. As a result, it makes the CIBIL report contain errors, and these mistakes can take a toll on the credit score. Therefore, it is imperative to examine the CIBIL report regularly and correct any mistakes therein. This can enhance credit scores providing candidates with a better loan facility.
Lenders can offer personal loans at a higher interest rate to people who have NA or NH marks on their credit reports. This shows credit inactivity or the absence of credit in the last 36 months.
The measures mentioned above can help a borrower get a personal loan with a bad CIBIL credit score. But after getting a personal loan sanction, he must have sufficient funds and repay the monthly EMIs on time. For this purpose, HDFC Personal Loan Calculator or personal loan calculator of any other bank can be used to determine the monthly instalments to be paid and plan the other expenditures accordingly. Lastly, if possible, one can pledge assets like gold or property to get a personal loan. So, considering all factors before opting for a personal loan is very important.
