How to take a personal loan for a low CIBIL Score

Sep 06, 2020

Banks and other financial agencies often conduct multiple checks into the economic behaviour of an individual before giving out loans to them. One of the indicators of reliable economic behaviour is a CIBIL score. It is sometimes difficult to secure a personal loan with low CIBIL score.

What is a CIBIL score?

CIBIL is a credit information company, which stands for Credit Information Bureau (India) Limited. It maintains records of credit-related activities for every individual, including loans and credit cards. A CIBIL score is used to determine how safe or risky it is to give loans to borrowers. A person with a high score can get loans easily when compared to a person with a low CIBIL score. A CIBIL score ranges from 300 to 900.

How does a person reach a good CIBIL score

A CIBIL score is calculated keeping in mind the credit history of an individual. This credit history includes repayment details across different loan types and institutions. A CIBIL score doesn’t just reflect your repayment behaviours against loans, but also against credit cards.

Different institutions have different thresholds for what a good CIBIL score is. Generally, a score above 650 is required for personal loans from banks. However, some Non Banking Financial Companies (NBFCs) lend out loans to scores as low as 550. But still, formal financial institutions do not give a personal loan without CIBIL. Hence, whether you are applying for a small business loan or an emergency loan for stay at home moms to manage funds during unavoidable circumstances, it is essential to take a look at your CIBIL score to check your eligibility.  

It is very difficult to get a personal loan for CIBIL defaulter. As a result, it is important to keep your CIBIL score high. Since CIBIL score is calculated keeping past financial actions in mind, it can’t be changed overnight. However, there are a few ways which will set you on a better path to increase your credit score. Such actions include things like eliminating your credit card balance, paying your EMIs on time, increasing credit limit and keeping old debt accounts that were paid on time on your record.  

Why do personal loans require a high CIBIL score?

Personal loans are often high-risk loans for the lender, since they tend to be unsecured. As a result, lenders need to be sure that the borrowers will repay their loans on time. A high CIBIL score means that the borrower is responsible and pays their EMIs and bills on time. It is often difficult to get a personal loan for low CIBIL score.

A high CIBIL score means there are lesser chances for the borrower defaulting on their loan repayments. Banks often give out loans easily to borrowers with high CIBIL scores, as compared to borrowers with low scores. Newly employed borrowers, new businesses, etc, might find it difficult to secure loans since their CIBIL scores tend to be low. It is for this reason that people turn to look for an instant loan without CIBIL being a determining factor for such loans.

Read our blog on Business loans for bad credit and low CIBIL score: Explained

Gold loan as an alternate

Gold loans have various benefits attached to them. For one, a gold loan is an instant loan without CIBIL. More importantly, gold loans often come with low interest rates, making it an affordable option to be considered when compared to personal loans. You just need to deposit gold objects that you own to a gold loan institution - which then acts as security for the loan amount that is being lent to you. Not only is this a fairly shorter process when compared to other loan methods, it is also a comparatively simpler one with no documents required other than KYC. Gold loans also help to build a positive credit history.

Gold loans often have a high loan to value (LTV) ratio. That is to say, the amount of loan is directly proportional and comparable to the value of the gold you deposit. Gold loans also often come with flexible repayment options, making it easier to repay the loan amounts as and when required.

When it comes to gold loans, Rupeek is a trustworthy option to go with. Not only does it not require a difficult to achieve CIBIL score, but it also is accomodative for its borrowers. You also also opt for our gold loan overdraft facility and enjoy the benefits of an overdraft like paying interest only for the amount utilised and getting cash transferred directly to your account, anytime, anywhere!