If you have a low CIBIL score, it can mean one of two things:
- Your credit record does not reflect the true picture as your lenders have made a mistake in the information shared with the credit bureau
- You have not been able to service the loans you have taken as per the agreed repayment schedule
If it is the first case, you don’t have much to worry. Just talk to your lenders and ask them to send an update to the credit bureau. Your CIBIL score will get updated to reflect the correct information, and you will not have to worry about your creditworthiness.
If it is the second case, your aim should be to fix your credit score. Now, it may take a few months for your efforts to bear fruit, but getting the loan you require will make the wait worthwhile. An improved score may also translate into a lower interest rate.
So, let’s dive right in to look at some of the steps you should take to get a personal loan with a low credit score.
Show that your income can support EMI payments
Your loan against property eligibility depends on the ratio of your monthly fixed obligations to your monthly income. If there is an additional income you can show to the lender apart from the one you already have, chances are your loan will get approved despite the low score. That said, you may have to pay a higher interest rate.
Apply with a co-applicant
Another way to improve your loan against property eligibility is to apply with a co-applicant. It could be your spouse or someone from your family who has a good credit score. You can also apply for a higher loan amount as both your incomes will be considered to calculate the loan eligibility.
Present a guarantor in your loan application
You can improve your loan eligibility by securing a guarantor for the loan. A guarantor will have to pay back the loan in case you default. of course, if you have a steady income, you may never have to depend on the guarantor for the actual payment.
Apply for a collateral loan
Lenders are usually willing to overlook your CIBIL score if you apply for a collateral loan. As the loan is secured, the risk is considered lower than unsecured personal loans. That said, only agree for EMIs that you can comfortably servicing. In case of repeated default, the lender has the legal right to sell the collateral to get the dues. Additionally, defaulting on your EMIs will further lower your credit score.
EndNote: Ideally, you should not take any other debts until you can service the ones you have comfortably. As your net worth grows, and your credit history improves – so will your CIBIL score. But, if you need the loan, follow the above steps. It is also a good idea to approach the lender and ask for details. Most customer care executives can help you with a viable option and solution.