Complete Loan Guide: Types of LoansDecember 3, 2021
Which bank is best for Education loan?December 13, 2021
How to get a Personal loan with Bad-Credit?
Credit score or CIBIL Score plays a critical role in getting approval for bank loans especially for personal loans. Your CIBIL Score acts as first impression while applying for a loan. Banks consider this score for assessing creditworthiness of the prospective borrowers. If you have a bad credit score below then it may be difficult for you to get a personal loan approval. Even if you are able to secure a loan then also you might have to pay higher interest rate. However there are other ways to get a loan approval if you have a bad credit score.
1. Assure for Repayment with Proof:
If you’ve got a salary hike or have an additional source of income then you can convince your lender that you will repay the loan amount within the specified timeframe. A lender may approve your loan application despite a low CIBIL Score however most probably charge you a higher rate of interest.
2. Apply for a lower Amount:
A lender may not be willing to allow higher loan amount to you. From a lender’s perspective it would be risky to allow a higher loan amount of loan to you. In such a case you can ask for a personal loan of a lower amount which would be less risky from the lender’s point of view. By doing this, there will be higher chances of getting approval of your loan application.
3. Apply with a Co- applicant:
If you have a lower credit/ CIBIL score, you can apply for a personal loan with a co-applicant or you can also secure your loan by appointing a guarantor who will take the responsibility of paying off the debt in case you are not able to repay the loan. This will reduce the risk of repayment and the lender may grant you a personal loan.
4. Improve/ Correct your CIBIL Score:
There are chances that your credit report may not be updated against your record. Check your credit report again and try to correct if needed. This will improve your credit score and also makes you a less risky applicant.
5. Know if your Employer has a tie up with the Lender:
If the company or firm you are working with is a reputed business organisation then then there might be chances that your employer has a tie up with the lender . In such a case the lender may approve your loan even if you have a lower credit score.
6. Go for a Secured Loan:
Instead of applying for a personal loan you can apply for a secured loan if your need is urgent and have anything to give something as collateral for security. The lender will consider your loan if your collateral worth sufficient as per the lender’s terns.
Apart from the above options you can also try to improve your credit score by taking various corrective measures such as timely payment of your credit card bills, paying existing loan EMIs on or before time, choosing another category of loans if you have not paid off the old loan etc.
Also read our other articles on Loans