CIBIL assigns a 3 digit number ranging from 300-900. It is a summary of credit worthiness. The credit score of a person is based on the repayments and loans availed (credit history) that is sourced from banks. CIBIL Score is one of the primary parameters that banks consider for approving a loan and is one of the most efficient systems that are recognized by all the banks as an authority on credit rating system.
The CIBIL score gives an idea on the repayment capacity and debt management capabilities of an individual. Banks generally do not offer loans to CIBIL defaulters as they follow strict guidelines for sanctioning loans. However, sometimes such applicants are offered loans considering some other eligibility criteria like high monthly income, employment in a reputed company (Fortune 500 Company), good CIBIL score of spouse or parent.
If the CIBIL defaulter meets these parameters, then the lender might consider sanctioning a loan. The only difference from a personal loan offered to applicants with a good CIBIL score is, lenders quote a higher rate of interest for people with poor CIBIL score.
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When a personal loan application is received by the bank, they check credit report and credit score. The Bank verifies the following details:
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Banks consider CIBIL score an important parameter for sanctioning personal loans. The banks do not approve the loan application, if the candidates CIBIL score is below a certain score. There may be circumstances where an applicant can avail a personal loan without CIBIL verification:
An applicant can also opt for personal loan without CIBIL verification. Generally banks and other financial institutions do not consider or approve personal loan application for borrower’s with low or no CIBIL score. In that case, a borrower can look for other sources like co-operative banks. However the interest rates will be higher for such applicants. Given below are some criteria through which borrowers can avail personal loan without CIBIL verification:
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CIBIL defaulters generally do not get loans. But there are some institutions like reputed banks or financial institutions, which offer credit to loan applicants by considering Company and monthly income.
Individuals working in a reputed company and getting a high monthly salary are generally granted personal loan even if they are defaulters. Banks follow strict rules and guidelines while sanctioning a loan and consider CIBIL score 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. They generally charge a much higher rate of interest on the loan sanctioned and the borrower has to pay higher EMIs on the loan.
How can I apply for a personal loan without a CIBIL score?
Given below are some of the options to get a personal loan without CIBIL verification:
How can I make my way through CIBIL verification despite a low CIBIL score?
You can improve your credit score by following the steps given below:
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