Mastering The Art Of Securing A Personal Loan For Low CIBIL Score
In India, a good credit score, as measured by the Credit Information Bureau India Limited (CIBIL) score, is an important factor in obtaining favorable financial deals. However, life’s uncertainties and financial setbacks can sometimes lead to lower credit scores. This article aims to provide detailed insights on CIBIL scores and how to obtain a personal loan for low CIBIL score in India.
Understanding the Credit Score:
When approached about obtaining a personal loan, you must first consider checking your credit score. The credit score, ranging from 300 to 900, is a numeric representation of an individual’s creditworthiness. Because personal loans are mostly unsecured, lenders rely on credit scores to determine an applicant’s risk profile. A higher credit score typically indicates a lower risk, making it easier to secure loans at favorable terms. A credit score of less than 650 is generally considered low and can impede loan approval.
Before we go any further, let us review the factors that influence the CIBIL score calculation:
Credit History:
Credit history accounts for up to 30% of your credit score. Credit bureaus use monthly credit information provided by financial institutions to calculate your credit score. Credit bureaus keep a month-to-month record of your payment history for the last seven years. The credit report also indicates whether each account has been settled, written off, paid off, delayed, or has an overdue amount. As a result, any delay or default on your loan EMIs or credit card bills will have a negative impact on your credit score.
Credit Utilization Ratio:
When calculating your credit score, the Credit Utilization Ratio (CUR) is given a weight of 25%. This is the amount you spend in relation to the credit limit on your credit card. Credit bureaus view having a high CRU or frequently maxing out your card negatively.
Credit Mix and Duration
Credit mix and duration account for 25% of your CIBIL score. This represents the amount of secured and unsecured loans you own. Secured loans are those that are secured by collateral, whereas unsecured loans are those that are granted solely on the basis of creditworthiness and do not require collateral. Any delay or default on any of these loans will have a direct impact on your credit score.
Other Factors:
Other factors, such as the number of previous loan applications, have a weightage of 20% on your credit score.
Improve Your Credit Score Fast:
Follow these steps to improve your credit score:
- Maintain the Credit Utilization Ratio (CUR)
- Limit your credit card spending
- Avoid applying for credit at multiple places
- Do not postpone your EMI or credit card payment.
- Do not default
- Settle the outstanding loans
- Monitor your credit report
- Maintain a diverse credit mix
- Be patient and persistent.
Seek Professional Help to Obtain A Personal Loan For Low CIBIL score
If you are struggling to navigate the lending landscape, consider consulting a financial consultant who can provide personalized guidance on how to improve your credit score and secure a loan that suits your needs. Nowofloan is one such financial consultant in India that offers a digital, user-friendly platform that allows loan seekers with low CIBIL scores to apply from the comfort of their own homes.
Nowofloan collaborates with multiple NBFCs to help loan seekers like you obtain pre-approved loan offers from these partnered NBFCs where your profile matches the eligibility profile. As previously stated, the traditional method of applying for a personal loan for low CIBIL score at multiple financial institutions will negatively impact your credit score; however, availing of a pre-approved loan offer from Nowofloan’s NBFC partners will not negatively impact your credit score.
In addition, the dedicated financial consultant who will be assigned to you will provide you with a personalized financial consultation. The financial consultant will assist and advise you on how to improve your credit score and ensure a smooth loan process.
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Conclusion
While a low CIBIL score can present challenges in obtaining a personal loan, it is not an insurmountable barrier. While availing of a personal loan for low CIBIL score is possible, it is equally important to understand the structure of the CIBIL score and approach the process thoughtfully and responsibly. Because each person’s financial situation is unique, tailoring your approach to your situation is essential.
