HOW TO GET A PERSONAL LOAN WHEN YOU HAVE A BAD CREDIT SCORE?
A credit score or a CIBIL score is the measure of your creditworthiness. A money lender or a bank decides if it wants to give you a loan or not on the basis of your credit score. The credit score basically summarises your credit history, the amount of loan or credit that you have taken, how you have repaid all your previous debts, etc. These things help a money lender or a bank to decide if granting a personal loan to you will be a risky thing or not. If you want to apply for a Vijaya Bank Personal Loan then your monthly income has to be between Rs. 4000- Rs. 20,000. However, not everyone has a good credit score, so, here are some of the steps that you can follow if you want to avail a personal loan with a low credit score: -
- PROVE THAT YOUR INCOME CAN SUPPORT YOUR EMI PAYMENTS-Since you do not have a good credit score, you need to ensure that you can repay the loan. If you have an additional source of income or an increase in your salary, a bank or a money lender may consider your application for a personal loan. You need to communicate to the lender that you have a stable job and also, a steady income so that they are able to grant you a loan even when you are having a low credit score. Also, you may have to pay a higher personal loan interest rate, after proving your eligibility because you have a low credit score.
- ASK FOR A LOWER AMOUNT OF PERSONAL LOAN- Since you have a lower credit score, if you will ask for a higher amount of loan, it will indicate more risk to the moneylender. If you will see this situation from a lender's point of view, having a low credit score and asking for a higher amount of loan indicates that you may default on repayment. Therefore, if you will apply for a personal loan for a lower amount of money, the moneylender will feel more comfortable granting you a loan. This is because the lower amount of money is easier to repay.
- APPLY WITH A CO-APPLICANT OR YOU CAN SECURE A GUARANTOR- If you are having a lower credit score, you can avail of a personal loan or apply for a personal loan by involving a co-applicant or a guarantor . The co-applicant will have to complete all the KYC formalities and has to provide his signatures too. Here, the key benefit of applying with a co-applicant is that you will have a steady source of money and it will also satisfy the moneylender. Therefore, it will help the money lender to grant you a personal loan even if you are having a lower credit score.
- CORRECT THE MISTAKES IN YOUR CREDIT SCORE- It is also possible that your credit report may have some mistakes. It usually happens when the latest information has not been updated against your record. These kinds of mistakes can take a toll on your credit history and credit score, for no-fault. Therefore, it is important to check that the information is updated and make sure that there is no mistake in your credit report on a regular basis. This step will boost your credit score and also, make you a better and eligible candidate for the loan.
- REQUEST YOUR LENDER TO CONSIDER YOUR CASE WITH A NA OR NH IN YOUR CREDIT REPORT: - The NH or NA on your credit report marks the absence of any credit activity that is happened previously or the absence of the credit in the last 36 months. If you do not have a credit score in your CIBIL report, then, you can try and speak to the moneylender about the credit inactivity. It is likely that the moneylender will offer you a personal loan at a higher interest rate.
Also read this: When should simply Avail the Personal Loan