How To Get a Personal Loan with Low CIBIL Score: An INDIE Guide

How To Get a Personal Loan with Low CIBIL Score: An INDIE Guide

21 June 2024 | By INDIE

Financial emergencies or personal requirements don't wait for a good credit score. From unexpected medical bills to urgent car repairs, or even a personal expenditure, you could want a sudden cash flow anytime. But what if your CIBIL score isn't up to the mark? You might also be wondering about the best place to get a personal loan with bad credit. Don't worry, you're not out of options. While a low credit score loan is trickier to avail, it's not impossible.

Here's your ultimate guide to navigating the lending options and getting a personal loan with low credit score.


Understanding the CIBIL Score

Before diving into strategies, let's understand what lenders consider when evaluating your loan application. The CIBIL score, also known as the credit score, is a numerical representation of your creditworthiness. It's a three-digit score calculated based on your credit history, including your borrowing habits, repayment behavior, and credit utilization ratio (how much credit you use compared to your credit limit). A higher score indicates a lower risk of default, making you a more attractive borrower to lenders.


Facing Reality: The Minimum CIBIL Score for a Personal Loan

While the minimum CIBIL score for a personal loan can vary slightly between lenders, it generally falls in the range of 700 to 750. This means that if your score dips below this threshold, securing a loan with a bad credit score becomes more challenging.


Tips to avail of a Personal Loan with a Low Credit Score:

1. The Power of a Co-signer or Guarantor: Enlisting the help of a financially strong co-signer or guarantor can significantly boost your loan application. A co-signer essentially signs on the dotted line with you, taking shared responsibility for repaying the loan. A guarantor, on the other hand, steps in only if you default on the loan. Having someone with a stellar credit score vouch for you assures the lender of lower risk, making them more inclined towards approving your loan application.

2. Improve Your Debt-to-Income Ratio:  This ratio indicates how much debt you owe compared to your monthly income. A lower ratio signifies better financial management and a higher capacity to handle additional debt. So, if you have a low CIBIL score, consider paying down existing debts to improve your debt-to-income ratio. This demonstrates to lenders that you're a responsible borrower who prioritizes repayments.

3. Explore Secured Loans:  Secured loans are a type of loan where you offer an asset, like your car or fixed deposit, as collateral. Since the lender has the security of repossessing the asset if you default, they are generally more lenient towards borrowers with lower credit scores. So, if you have a valuable asset, consider a secured loan as an option.

4. Negotiate: If your CIBIL score shows "Not Available" (NA) or "No History" (NH), it means there isn't enough information for a score. When applying for a personal loan with a limited credit history, talk to the lender about including this in your application.

5. Cast a Wider Net: Don't limit yourself to just one lender. Research and compare offerings from various banks, non-banking financial institutions (NBFCs), and online lenders. Explore options other than personal loans like a credit line.


Beyond the Score: Building a Strong Loan Application

While a low CIBIL score can be a hurdle, it doesn't have to be a dealbreaker. By strategically building your loan application and showcasing your financial responsibility, you can still increase your chances of approval.

Also read: Tips To Improve Credit Score

A low CIBIL score is a temporary setback, not a permanent roadblock. By following these strategies and demonstrating your financial responsibility, you can secure the personal loan you need. On INDIE, you can avail an instant credit line which combines the features of a personal loan with that of a credit card. So, don’t get discouraged by a low CIBIL score and unlock your financial potential with INDIE. 




Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your 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 making any financial decisions based on the contents and information.