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Personal Loan for Low CIBIL Score Research Team | Posted On Tuesday, January 08,2019, 06:59 PM

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Personal Loan for Low CIBIL Score



Personal Loan for Low CIBIL Score:

When an individual applies for a personal loan, he must meet the minimum eligibility criteria required for banks to sanction the personal loan. One of the most important criteria to avail a personal loan is that the individual must have a good CIBIL score. The CIBIL score is a numerical assessment of the person’s repayment history that represents his credit worthiness.

TransUnion CIBIL assigns a 3 digit number usually ranging from 300-900 and the credit score of a person is based on the financial data, banks submit to CIBIL. CIBIL Score is one of the primary parameters that banks consider for approving a loan.

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Personal Loan for Low CIBIL Score

How does CIBIL Score work?

An individual is assigned with a CIBIL score which generally ranges from 300 to 900. The CIBIL score assigned to a person is generally calculated based on the data/ information that the bank forwards to CIBIL. The information sent by the bank contains the repayment history of the individual on various loans and credit cards.

If the individual has a good repayment track record, then it will reflect positively on the credit score. In case the individual has defaulted on payments or has failed to payback credit card dues, it will severely impact the CIBIL score. It will lower the CIBIL score and would make it difficult for the person to avail a loan or get loans sanctioned.

What factors lower CIBIL Score?

Listed below are the factors that can deteriorate CIBIL score:

  • Taking too many personal loans at the same time can negatively impact your CIBIL score as these are unsecured loans.
  • In case you have too many rejected loan applications due to repeatedly applying for loans at various banks, then it brings down your CIBIL score.
  • In case you have missed an EMI on your existing loan, than it may impact your CIBIL score.
  • If you fail to pay your credit card dues on time, it will negatively impact your CIBIL score.
  • If you have settled a credit card with the bank by paying an amount less that the dues, then it will reflect on your credit score.
  • If you often come close to your credit card limit, then it shows constant debt and poor money management.
  • If you have an outstanding balance on your credit card or you are paying a minimum due on your credit card, then credit score would be low.
  • If you do not use credit cards or you have never taken a loan, then your credit score is 0 as you have no credit history. If you apply for a loan with no credit history, then you application is likely to get rejected.

How CIBIL scores affect eligibility for loans?

The banks consider CIBIL score an important parameter for sanctioning your personal loan. The banks do not approve the loan application, if CIBIL score is below a certain number. If the bank approves a loan with a bad or low CIBIL score, than they generally charge a higher rate of interest compared to a loan sanctioned for individuals with a high credit score.

Banks follow strict rules and guidelines while sanctioning a loan and consider the CIBIL as an important parameter for loan approval. The NBFCs do not have such strict regulations and offer personal loan to individuals having low CIBIL score.

How to improve your CIBIL score?

Mentioned below are some tips and tricks that will help you improve your CIBIL score in case you have low credit rating:

  • Pay back the outstanding amount on your credit card. If you are paying the minimum due then that’s not enough. Clear all your dues as early as possible to avoid a bad CIBIL score.
  • If you do not have a good credit score, then do not use your credit card as this will lead to creation of more debt, along with the existing debt.
  • Do not surrender your credit card to the bank or cancel it, else you will not be able to show a long credit history.
  • In case you do not use credit cards or have never availed a loan, then you can apply for a secured loan like car loan or home loan. However, the bank may charge you slightly higher rates of interest.
  • Make sure not to come too close to your prescribed credit card limit as it will have a negative impact on your credit score.
  • Do not apply for loans at multiple banks. If your loan or credit card application is rejected, do not apply for the same immediately with some other bank. Wait for a period of 6 months and then apply again.

Steps to check free credit score report from

IndianMoney has a tie-up with Experian to give free credit report and free credit score. Get free credit report by following the steps given below:

  • You have to click on ‘Get free credit score now’
  • Fill in the first name, last name, email address, gender, and date of birth, address, pin code, city, PAN card number and mobile Number.
  • An OTP is sent to your mobile number.
  • Fill up the OTP and tick, “Get my Credit Report”. 
  • You will see credit score and credit account summary.

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