Lenders often sanction personal loan online by checking your credit score. The Credit score has the complete details about your credit history, the credit you have taken, and your repayment. These factors help the lenders evaluate the risk in sanctioning loan. Since, the personal loan is an unsecured loan, they often expect applicants to have a good credit score.
Does that mean people with low credit score do not have any chance to avail personal loan? You can still avail a personal loan despite having a bad credit score. Here are a few measures that can improve your chances to get personal loan:
Income Proof
If you have received a hike in your salary or have an additional source of income, the lender may consider your application for a personal loan. If you can convince the lender that you receive a stable income and have a steady job, then the lender might approve a personal loan to you
Ask for a lower amount
While the lenders might hesitate to sanction higher loan amount for people with lower credit score, you can ask for a lower loan amount. In that case, since the risk is low, the lender might approve your request for a personal loan
Apply with a Co-applicant or a Guarantor
In the event your credit score is low, you can apply for a personal loan with a co-applicant. The bank will sanction the loan, if your co-applicant has a good credit score, after KYC verification. The key point to be noted here is that the co-applicant needs to have a stable job and a steady income.
Check your CIBIL report
Your CIBIL report might at times contain errors. It happens when the latest information does not get updated. Mistakes like these can prove too costly affecting your credit score. So, it is important to check your CIBIL report periodically and correct the errors as much as possible
Your CIBIL score is calculated based on these four factors – Payment History, Credit Exposure, Credit type and tenure, and other factors.
Understanding the effects of bad credit on financial health is crucial for anyone seeking a personal loan. A low credit score can impact not only your loan approval but also the interest rates you receive, potentially affecting your long-term financial well-being.
Credit Inactivity
At times the credit report will show nothing, when you do not have any loan or credit card activity for over 3 years. In such case, banks would offer a loan at a higher rate of interest as they do not have an idea about your credit habits and it would be a high-risk category
These are some of the ways through which you can avail personal loan despite having a bad credit score. However, do make sure you repay the personal loan properly as not doing so, would cause your credit score to plummet further. Applying for a personal loan from Fincover.com is easy. Fincover breaks down the complexity of visiting every personal loan lender website and has built a platform that offers one-window view of all personal loan options available in this country.
