When you need a personal loan, one critical factor that can significantly influence your success is your credit score. Understanding the nuances of its impact and how to navigate the landscape with a low CIBIL score can be the key to securing the loan you require.
What is the impact of Credit Score on a Personal Loan
Your credit score is like a financial report card that lenders closely scrutinize when considering your loan application. It acts as a reflection of your creditworthiness and financial responsibility. A low CIBIL score may pose challenges, potentially resulting in higher interest rates or even rejection of your loan application. However, it's not the only deciding factor, and there are ways you can improve your chances of approval.
How to get a Personal Loan with a low CIBIL Score
Obtaining a Personal Loan with a low CIBIL score is possible. It involves meticulous planning and showcasing your financial stability and repayment capability to the bank. In other words, you have to prove that you have the financial means as well as the intention or will to repay the loan. Strategies may include providing your employment details such as salary slips for the past three months to show that you have a regular income, your letter of employment to show how long you have been employed with your current employer or your bank statements or IT returns for the last three years.
Eligibility to get Personal Loan for a low CIBIL Score
Eligibility criteria for obtaining a personal loan, especially with a low CIBIL score, typically include having a stable income, employment proof, a decent bank balance, and possibly a co-signer. Understanding and meeting these criteria can significantly impact your chances of loan approval.
Also Read: Can getting a Personal Loan improve your credit score?
Minimum CIBIL Score required to get Personal Loan
While a higher credit score often improves your chances of loan approval and favourable terms, some lenders offer personal loans to individuals with lower credit scores. Knowing the minimum threshold required can make it easier when you apply for the Personal Loan. Typically, a score of 750 and above is considered good for securing a Personal Loan. CIBIL scores range between 300 and 900
Can I get an Instant Loan for a low CIBIL Score?
Instant loans are accessible for those with lower credit scores, but it's crucial to note that they often come with stricter terms and higher interest rates. Rapid evaluation and specific considerations, such as demonstrating consistent income and employment stability, become pivotal in securing these loans.
Can you get a loan if your Credit Score is below 600
It is tough to get a Personal Loan if your credit score is below 600. However, it requires meticulous planning and demonstrating strong financial stability. Fulfilling specific conditions and showcasing a reliable income source is vital in improving your chances of loan approval.
Show income proof
Presenting a steady income source, whether through salary slips or other reliable documents, is a cornerstone of your loan application. It assures lenders of your capacity to repay the loan, despite a low credit score.
Also Read: How to get Personal Loan without salary slip
File IT Returns
Filing income tax returns substantiates your financial credibility, showcasing responsible financial behaviour and bolstering your loan application.
Provide employment proof
Evidence of steady employment, such as employment letters or salary certificates, reinforces your loan application by demonstrating stability and the ability to repay the loan, even with a low credit score.
Have a decent bank balance
Maintaining a reasonable bank balance serves as a testament to your financial stability. It can outweigh the impact of a low credit score, showcasing your ability to manage finances responsibly.
Conclusion
Securing a personal loan with a low CIBIL score necessitates meticulous planning and the demonstration of financial stability. Understanding how credit scores impact loan approvals and fulfilling specific criteria can significantly enhance your chances of successful loan acquisition.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
