When it comes to availing any kind of loan, a CIBIL score is crucial. When you submit an application for a personal loan to any bank in India, the majority of lenders will want a high CIBIL score apart from other essential documents. At this point, you must be wondering, is it possible to apply for a personal loan with a poor CIBIL score? Say your CIBIL score is 700. Will your loan application be approved by any lenders? Yes. If your CIBIL score is 700, you are eligible to apply for and receive a personal loan. But, what if your CIBIL score is less than 700? In this post, we are going to discuss what one should do to increase their CIBIL score and fulfil the minimum CIBIL score for personal loan in SBI bank.
But first, why is having a CIBIL score significant?
CIBIL score is a 3-digit numerical that represents your credit history. A rating organization called CIBIL examines your credit history and gives you a score it is important to fulfil the basic minimum CIBIL score for personal loan in SBI bank.
But why do lenders place such a high value on it and require everyone to fulfil the CIBIL score for personal loan? This is so that your creditworthiness can be determined by your credit score. It provides the lender with a quick assessment of your ability to make timely loan repayments, with very little risk of default or missing payments.
There are a few measures you must do before applying for a personal loan if your CIBIL score is below 700:
First, find the amount of money you require. Determine the necessity first, then determine whether you have the cash flow to cover the costs. If not, then applying for a loan with a low CIBIL score is a viable option or you can also work towards improving the minimum CIBIL score for personal loan in SBI bank. Find a lender who would let you avail personal loan even with a poor CIBIL score. You should be aware that the likelihood is strong that the lender would charge you a higher interest rate due to your CIBIL score for personal loan.
Before you apply for the loan, gather all of the required documentation. Your loan application will be denied even if one of the documents is incomplete or inaccurate.
Factors Responsible For A Low Credit Score
A low CIBIL score for personal loan is not caused by one specific aspect. To discover where you have lost points, see your CIBIL Score report:
Your CIBIL score would suffer if you have failed on a credit card payment or just forgot to pay an EMI and you should never miss out on payments to ensure you are able to fulfill the minimum CIBIL score for personal loan in SBI bank.
How much credit are you currently using? You should ideally use at least 30%. Anything above that would imply you have a low level of financial control on your part and the lender would think of you as someone who cannot fulfill CIBIL score for personal loan.
Your CIBIL score report will indicate if you frequently inquire about new loans or apply for credit cards.
The length of your credit history, although it may not seem important, is also a factor responsible for your low CIBIL score and why you are not able to fulfill the minimum CIBIL score for personal loan in SBI bank. If you haven’t repaid your personal loan in 4 years, it will negatively impact your credit score.
Ideally, it is recommended to have a healthy credit mix. This should include your credit card, secured loan as well as an unsecured loan.
Can someone with a CIBIL score of 700 avails personal loan?
There is no need to be disheartened if your CIBIL score is below average. You can take action to raise that score. There are a few procedures you need to do before applying for a personal loan if you have a low CIBIL score of 700.
Here are some suggestions to help you raise your credit score:
- If you have credit cards with an outstanding amount, you should pay them off as soon as you can because even if you pay the minimum amount due, CIBIL will still consider the balance to be unpaid even after you do. Make certain that these payments are clear on time. To pay your EMIs, you can either set a reminder for a few days before the due date or authorize an electronic mandate.
- Try to limit your borrowing if your credit is not that good. By doing this, you’ll have more time to pay off your present debts without accruing new ones.
- Assuming you have paid off all of your debt and decide to cancel all of your credit cards to celebrate your debt-free status, DON’T! If you close every card, you won’t be able to establish credit history later on when you’ll need it.
- You can always apply for a secured loan, such as a car loan if you don’t have any credit cards or loans that can help you establish a credit history and raise your credit score. With such a loan, you might not get the best interest rate, but at least you could be able to establish credit more quickly.
- There are occasions when you move into a home and learn that the address has been blacklisted as a result of the bad activities of the person who lived there before you. What you can do in this situation is notify CIBIL of the error and get it fixed.
- Make sure you stay away from using your credit cards as much as possible.
- You might approach banks that offer credit cards in exchange for fixed deposits if you are unable to obtain a loan or credit card to start building your history. The plan is for you to open an FD with them, and they might then issue you a credit card with a limit that is just a little bit less than the amount of your FD. By doing this, you will enter the credit system and establish a credit history.
- It’s best to establish a habit of making sure that ALL of your bills are paid in full and on time because, over time, even utility bill payments will have an impact on your CIBIL score.
- Don’t apply for loans or credit cards if you’ve already been turned down for one.
Conclusion
Remember to check your CIBIL score prior to applying for the loan. This will help you understand why your CIBIL score of 700 was so low. If there is any inconsistency, you can even have it fixed. Once you’ve got a personal loan, make sure your financial plan is sound. Before applying for another loan, be sure that any high-interest personal loans you have already taken out are paid off.