Low CIBIL Score? Here’s how you can get a Personal Loan anyway

  • Updated on: 26 Dec 2023
  • Published on: 23 Nov 2020
Low CIBIL Score? Here’s how you can get a Personal Loan anyway

You must be wondering, is it possible to avail of a personal loan with a low CIBIL score? Before we get into that, consider when a personal loan comes in handy and why CIBIL scores are important. When you require funds to meet your planned or unexpected expenses, availing of an unsecured personal loan is the go-to option. From helping you meet your wedding costs to purchasing your dream home, loans fulfil these financial requirements hassle-free. 

That said, getting loan approval isn’t that easy and depends on various factors. One of the critical parameters that lenders consider when sanctioning your loan is your credit score. Hence, understanding the importance of this score is essential if you plan to avail a personal loan or any other form of credit. 

Read on to find out more about your credit score.

What exactly do you mean by a Credit Score?

A credit score is a three-digit numeric representation of your creditworthiness, ranging from 300-850. With the promulgation of the Credit Companies (Regulations) Act in the year 2005, four specialised agencies were created to assess each and every borrower based on all their credit activities in the past and assign them a credit score. 

As of now, there are four such institutions in India, out of which the most popular one is the Credit Information Bureau (India) Limited or TransUnion Credit Limited, as it is currently called.

Simply put, a credit score or a CIBIL score is assigned by the credit bureau after assessing your credit payment history for various types of loans you have availed across different financial institutions. But this score does not include your investments or savings.

How is the Credit Score associated with Personal Loans? 

To prevent any banking fraud and to ensure proper repayment of loans by the borrowers, the government gave emphasis on individuals’ credit history. Furthermore, the RBI has issued guidelines that no loan or other forms of credit should be given without evaluating the individual’s credit score. 

When you have an excellent score close to 850, your chances of getting approvals on personal loans are higher. Most financial institutions set an optimal CIBIL score of 750 or above as ideal for loan approval. A good credit score increases the trust of lenders, as they rest assured that you will not default on loan repayment

So, you may think, what about those individuals who may want to avail of a personal loan with a low CIBIL score? While some lenders do give approval on personal loans with a low CIBIL score of 650 or above, your overall borrowing costs can be expensive. This means you have to pay a higher interest rate on the loan amount you borrow, as the lender may not see you as a reliable borrower.

But not to worry, as there are numerous ways by which you can improve your credit score. Simply following these tips and tricks can help you boost your score and increase your chances of loan approval.

Factors affecting your Credit Score 

There are numerous factors affecting your credit score and decreasing your loan approval chances. Check out a few factors here:

  • Delaying the repayment of your previous loans
  • Defaulting on your loan repayment 
  • Accumulating your credit card bills
  • Applying for multiple credit options in the form of loans or credit cards at the same time
  • Availing a vast number of unsecured loans

These are just a few of the factors which can affect your credit score. To know more, take a look at this post on factors affecting your credit score.

Ways to avail of Personal Loans without considering your Credit Score

If you need a personal loan with a bad CIBIL score, there’s no need to stress. You can get a loan even without a credit score. Here are some ways that can help you get an instant loan with a low CIBIL score.

Submit Proof of Your Income Source

The lender is always concerned with loan repayment. So, you can submit financial statements related to your income proof. This way, when you need a personal loan with a bad CIBIL score, lenders may consider your application.

Apply for a Loan with a Co-applicant

If you are planning to avail of an instant loan with a low CIBIL score, you can get approval provided you have a guarantor or apply with a co-applicant who has a high score. This provides assurance to the lender to approve your loan.

Avoid Availing Multiple Forms of Credit

When planning to get an instant loan with a low CIBIL score, check your existing financial obligations. Applying for loans with multiple lenders can have a negative impact on your credit score. 

Take a loan from a non-financial banking company or NBFC

Opting for a personal loan from an NBFC involves a simple and straightforward process. With minimal paperwork and quick personal loan disbursement, you can get the required funds in no time. 

Furthermore, there are numerous NBFCs from where you can get a personal loan with a low CIBIL score. One of the popular lending platforms is Fibe, which offers Instant Personal Loans for a maximum amount of up to ₹5 lacs. At Fibe, we use an alternate credit scoring model to assess your repayment ability. So, you do not need to have a good CIBIL score to get financing. 

At Fibe, we can meet all your financial requirements with just a single click. It’s that easy to avail a personal loan with a low CIBIL score. As such, the eligibility criteria are simple, and you can enjoy the loan at affordable interest rates. Download the Personal Loan App or register on our website to get the required funds.

FAQs on Personal Loans with a Low CIBIL Score

How to get an NBFC personal loan with a poor credit score?

You can opt for an instant loan at Fibe even if your credit score is low. We have an alternate scoring mechanism to check your creditworthiness and give instant loan approval once you meet the required eligibility criteria. 

What is the optimal credit score required when availing a personal loan?

An ideal score of 750 or above is considered by most lenders when approving applications for personal loans. However, at Fibe, we do not rely on your credit score and check your creditworthiness through other means.

What is considered the lowest score for personal loan approval?

While a score above 700 can get you approval, a score less than 600 can lead to your loan application being rejected by the lender. 

Can I improve my CIBIL score?

Yes. You can improve your score by clearing your credit card dues on time and paying your loan instalments without any delay.

Is 0 a good CIBIL score?

No. The lowest credit score starts at 300, so 0 is similar to Not Applicable or NA in the credit score range.


Our top picks

Can Millennial Stress be Resolved by Financial Wellness?
Finance | 3 mins read
How Organisations Can Measure the Impact of Financial Wellness Programs
Finance | 3 mins read
How Can HR help Overcome Staffing Challenges in the Digital Age?
Corporate | 3 mins read
5 Signs of A Good HR Function
Corporate | 3 mins read