Have a low CIBIL score? Here’s how you can boost your chances of getting approved for a personal loan

Posted on Monday, September 25th, 2023 | By IndusInd Bank

The world is full of uncertainties, and many times, you are faced with emergencies that require financial support. During such times, a simple yet versatile financial product like a personal loan comes to your rescue. A personal loan is a collateral-free loan that can be obtained easily without any collateral, security or a guarantor.

However, your CIBIL or credit score is a crucial factor that lenders consider when you apply for a personal loan. If you have a low CIBIL score, the lender considers you to be a risky loan applicant and might reject you outright or the personal loan interest rate charged could be quite high!

This comprehensive guide will take you through factors impacting your CIBIL score and the strategies that help in getting a personal loan even if your CIBIL is low.

Factors that impact your CIBIL score

1. Repayments

Not paying your credit card bills on time or skipping payments completely can pull down your credit score. This information is also reflected in your credit report, which is viewed by lenders when you apply for personal loans.

A poor repayment history could reduce your chances of securing a loan in the future.

2. Multiple debts and credit cards

Having too many credit cards or loans (secured / unsecured) might be an indicator of how heavily dependent you are on credit. It can bring down your CIBIL score by impacting your credit utilization ratio. This could lead to the possibility of your loan applications getting rejected in the future. 

3. Maxing out your cards

If you have the habit of using your credit limit completely, you may have to rethink this. This could hurt your credit score. Learn to divide your expenses between cards and prioritise your expenses. This will help you track your expenses better and improve your CIBIL score as well.

Generally, keeping your credit utilisation ratio below 30% is considered ideal.

4. CIBIL report errors 

Sometimes your credit report might not update your debt information. For instance, though you might have closed a loan, it might still be reflected in your report. Such inaccurate information can lower your score. It is essential to review your CIBIL report periodically to identify such issues and resolve them at the earliest.

Strategies to get a personal loan with a low CIBIL score

Your credit or CIBIL score indicates whether you are a responsible loan applicant who repays all dues on time. Your creditworthiness is evaluated based on various factors like your credit history, the number of debts taken, the loan amount, and your repayment history.

Lenders generally consider a CIBIL score of 750 and above as satisfactory. Not only will your personal loan application get approved, but you may also get the lowest personal loan interest rates on it!

However, in case you have a poor or low score, your loan application might face rejection. This is because lenders might perceive you to be a risky applicant. 

No need to fret. Even if you have a low CIBIL score, you can still get a personal loan, provided you follow a few important strategies.

1. Lower your loan requirement: The simplest way to get a personal loan while having a low CIBIL score is to apply for a lower loan amount. This would reduce your risk, and lenders might gain the confidence to approve your personal loan application.
   
   
2. Income proof: For lenders requesting income proof, make sure you submit your Form 16 / ITR for the last 3 years, the latest 3 months’ salary slips or proof of any recent promotion/salary hikes. Having a steady job and income can act as an encouraging factor for the lender to consider your loan application. There are a few banks like IndusInd Bank that do not require income proof for personal loans.
   
   
3. Get a co-applicant for your loan: It is easier to get a personal loan despite having a low CIBIL score if you can get a co-applicant or guarantor having a good CIBIL score. Their credibility and income act as additional security, and lenders gain more confidence in sanctioning your personal loan. However, you must remember that a guarantor or co-applicant will be responsible for clearing your loan in case you default; so finding a co-applicant can be a tough job!
   
   
4. Request to consider NA / NH in the CIBIL report: Sometimes, you might observe your credit report having an “NA” or “NH”. This indicates there has been no credit-related activity available or there’s no history. This could lead to a low CIBIL score or even no score at all!

In such a scenario, you could connect with the lender and request them to re-consider your credit report. The lender might approve your loan application but might charge you a slightly higher rate of interest. 

Strategies to boost your CIBIL score 

If you have a low credit score, you can implement the below-mentioned strategies to enhance your score and avoid any further damage:

1. Avoid taking multiple loans and credit cards at the same time.
2. Use your credit cards responsibly.
3. Make sure you repay all your credit card bills and loan EMIs on time.
4. Introduce budgeting in your finances to have a clear idea of your expenses and income.
5. Monitor your credit card statements and CIBIL reports regularly to identify any issues and errors.

By implementing these strategies, you can give your CIBIL score the boost it requires.

IndusInd Bank Personal Loans

Applying for personal loans with IndusInd Bank is a 100% paperless process. You can easily apply for a personal loan from the comfort of your home, with just your PAN and Aadhaar details.

Some essential features of IndusInd Bank Personal Loans are:

• No collateral requirement 
• Low-interest rates starting from 10.49% p.a.
• Flexible tenures ranging from 12 to 48 months
• Loan amounts range from ₹30,000 to ₹5,00,000 

You can use IndusInd Bank’s personal loan EMI calculator to gain clarity on your monthly EMIs even before you apply for a personal loan.

Conclusion

Getting an online personal loan with a low CIBIL score is no longer an unattainable dream. Though it can be a challenge, following the right strategies like getting a co-applicant for your loan or improving your CIBIL score, can help you get an instant personal loan.

Applying for IndusInd Bank Personal Loans is a 100% digital process with no collateral requirements. Apply now for a personal loan and get access to the financial resources to achieve your goals.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and 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.