Are you in need of a personal loan, but unable to secure one due to a low CIBIL score? Stay calm! You are not the only one. A lot of people lack much-needed perfect credit histories, so they face problems when seeking financial assistance. But don’t you worry? We have got a piece of good news for you. An NBFC (short for Non-Financial Banking Company) has evolved as a trusted alternative for those looking to borrow an NBFC personal loan for low CIBIL score.
In this blog, we will discuss how you can secure an NBFC personal loan even if you have a poor credit score.
First things first!
Why Have NBFC Personal Loans Gained Tremendous Popularity?
Many individuals look no further than an NBFC when it comes to obtaining a personal loan. Offering flexibility is one of the reasons why Non-Banking Financial Companies have become a popular go-to destination for personal loans.
Aside from looking at the credit score, they consider other crucial factors. They emphasize factors, such as the loan borrower’s income source, employment status, etc. Hence, securing a personal loan from an NBFC is now possible even if you don’t have a perfect CIBIL score.
Furthermore, NBFCs don’t ask for much documentation, as their requirement is minimal. What they usually ask for is crucial documents, including an Aadhaar card or PAN card along with a borrower’s basic details.
When it comes to loan disbursal, no other lending agency or financial institution does it better than an NBFC. They disbursal the personal loan even before you know it. Their loan disbursal time unquestionably makes them a popular choice among people who need a personal loan instantly.
Can I Get a Personal Loan from an NBFC if I Have a Poor CIBIL Score?
If you are applying for a personal loan for the first time, you must be aware of the term “credit score” and its ranges. If your credit score is between the range of 300-500, it is a poor credit score. While securing a personal loan from an NBFC may pose a challenge, it is certainly not impossible.
Several Non-Banking Financial Companies (NBFCs) don’t abide by stringent guidelines when it comes to approving a personal loan an individual has applied for. That is because the flexibility they offer works in the borrower’s favor. Other than considering an individual’s credit score, factors like employment status and income source play a vital role for NBFCs when approving the borrower’s request to secure a personal loan.
Worried about having a low CIBIL score?
Not anymore! You may boost your chances of loan approval when you have a co-applicant backing you up. Individuals usually settle for no less than a personal loan offered by an NBFC. This is because NBFCs don’t have strict eligibility requirements to meet compared to conventional banks or lenders.
How Can I Secure an NBFC Personal Loan for Low Credit Score?
Even with a poor CIBIL score, getting approval for an NBFC personal loan is possible. Listed below are some significant steps you must follow when you are applying for a personal loan with poor credit:
1. Evaluate Your Credit Score and History
Checking your credit score and history is what you must do before you apply for a personal loan. Report mistakes or unauthorized entries to the bureau if you find any in the credit report. When you resolve these unwanted errors, you can look forward to a significant boost in your credit score.
2. Research the Best NBFC for You
Not every NBFC (Non-Banking Financial Company) offers the same lending policy. Some focus on offering loans to individuals having a poor credit history. Ensure you thoroughly research different lenders and do a brief comparison.
Find various lending agencies offering flexible interest rates and guidelines even for borrowers with poor credit scores. Many lenders overlook the credit score if it’s low, as they consider other vital aspects, including employment status and income sources.
3. Collect the Required Documents
The lending agency may ask for additional documents if the applicant does not have good credit. Make sure you have all the documents required to be submitted at the time of applying for an NBFC personal loan for low CIBIL score. Here is a list of the documents that you need:
- Aadhaar card, PAN card (Proof of Identity)
- Utility bills (Proof of Address)
- Bank Statements, Salary Slips (Income Proof)
- Employment Details
4. Meet the Eligibility Requirements
No matter what NBFC you opt for, checking their eligibility requirements is paramount. Make sure you meet the requirements the Non-Banking Financial Company has set for an applicant in terms of eligibility.
5. Improve Your Application
- Build Credit Score? Do you have more time? If so, building an ideal credit score will work to your advantage before you apply for an NBFC personal loan for low CIBIL score.
- Choose a Secured Loan: Opting for a secured loan allows an applicant to deposit their asset as loan collateral. Go for a secured loan if you can offer an asset as collateral. It could be a car or a fixed deposit.
6. Submit Your Application
Once you have met the eligibility requirements and the necessary documents are ready, you can now submit your loan application online.
7. Follow Up and Negotiate
Is your loan application not approved? You can either request or negotiate for a smaller amount than what you originally applied for or a somewhat higher interest rate. Moreover, you can ask about any other significant measures you can take to increase the chances of your loan getting approved.
How Can I Improve My CIBIL Score?
Rebuilding your credit profile for great financial health will always work to your advantage even if your NBFC personal loan for low CIBIL score gets approved.
Here’s how you can boost your CIBIL score:
- Ensure you timely pay all EMIs and credit card bills
- Avoid exhausting your credit limits
- Keep an eye on your CIBIL report regularly for errors (if any)
- Never indulge in unnecessary loan inquiries
- Make sure you always maintain a credit utilization ratio below 30%
Steps to Secure an NBFC Personal Loan for Low CIBIL Score
While it is not easy to get a personal loan with a poor credit score, you can take certain steps to boost your loan approval chances.
Listed below are some of the most significant steps you must take:
1. Apply for a Lower Amount
Got a poor credit score? You can expect the possibility of receiving approval on your NBFC personal loan if you apply for a lower loan amount. But wait! This is only possible if you have a low CIBIL score benefiting you every step of the way. Apart from alleviating the lending agency’s risk, it improves your credit score after you repay the loan without hassles.
2. Get a Guarantor or Co-Applicant
If you have an individual you can rely on as a guarantor or co-applicant, it will boost your credibility for the lending agency. However, this person ought to have an ideal credit score and a stable source of income.
Such applications are often viewed favorably by NBFCs. They may offer greater loan terms and reduced interest rates.
3. Show Stable Income Source
Having a stable income source will allow the NBFC or lending agency to approve the personal loan. Ensure you have salary slips, bank statements, or ITRs (income tax returns) so the lender can know that you have a stable source of income.
4. Consider Using a Collateral
If the lending agency knows that there is a payback guarantee, they are more likely to approve your NBFC personal loan for low CIBIL score. Pledging an asset, such as a car or mutual fund is a good call. Doing so can enhance your chances of getting approval for a personal loan.
What Challenges May Occur When Applying for an NBFC Personal Loan for Low CIBIL Score?
A loan borrower may face plenty of challenges when they apply for an NBFC personal loan with poor credit. Here is a list of some of the most common challenges:
- Higher Interest Rates: A borrower with a poor credit score may face a challenge when the NBFC charges a high interest rate to balance the risk involved in lending them money.
- Short Repayment Tenure: The loan repayment term may be offered by a lending agency for a shorter tenure. While the individual who applied for a personal loan gets the amount, they need to work out a way so they can repay the loan amount in a short duration.
- Collateral Requirements: The lending agency may require the loan borrower to deposit an asset as collateral. This is necessary to get approval for a personal loan.
- High Chances of Loan Being Rejected: When the borrower has a poor CIBIL score, the chances of a loan getting rejected are higher.
Final Thoughts
Having a poor CIBIL score does not have to be the end of a journey. You can still obtain the funds you need to meet your household requirements. When you choose the right lending agency, you can secure a NBFC personal loan for low cibil score. Keep in mind that repaying on time is the key to demonstrating your creditworthiness.
Frequently Asked Questions
A personal loan for a low credit score is for those individuals who have bad credit. These loans have higher interest rates and may carry stringent terms compared to conventional personal loans.
Eligibility criteria for a personal loan with a poor credit score are applicable for individuals with credit scores below what’s required for traditional loans. Some lending agencies may consider income sources or even allow co-applicants to boost their eligibility.
Personal loans for poor credit serve diverse purposes. These include emergency expenses, rebuilding credit, or debt consolidation. They provide individuals with much-needed financial assistance.
To improve your chances of getting approval for a personal loan, ensure you maintain a good CIBIL score. Also, you must consider paying your bills on time and managing your finances sensibly.
You can get personal loans with a low credit score from online lending agencies. You can even consider alternatives like a secured loan.
