Over the past few years, the TransUnion CIBIL has recorded a slow increase in credit score access by consumers. This has occurred despite several regulatory initiatives to provide free access to credit information reports. However, CIBIL score is one of the primary criteria for lenders to approve loans. With 750 being the qualifying score, it becomes challenging for borrowers to get a personal loan for CIBIL score of 550.
- According to a TransUnion CIBIL study, of 54 million women consumers, 53% held a CIBIL score of 731 – 770 as of 2021.
Issued by TransUnion CIBIL, one of the largest credit bureaus in India, the CIBIL score is accepted by majority of the financial institutions in the country. The firm maintains credit details of around 600 million people and 32 million commercial entities.
About CIBIL score
CIBIL score is a 3-digit numerical expression of an individual’s creditworthiness. It represents the borrower’s past financial and repayment behaviour. Rated on a scale of 300 – 900, a loan applicant must possess a credit score above 750 to qualify. As personal loans are unsecured loan and do not require any collateral against the fund, credit score plays a major role in their approval.
How to get a personal loan with CIBIL score of 550?
Now that you know the importance of CIBIL score, check out how to avail funds at a low score.
With a CIBIL score of or below 550, it becomes difficult for individuals to borrow money as lenders consider them as risky borrowers. Such a score clearly indicates that your financial behaviour has an issue and thus needs improvement. If you apply for a collateral-free personal loan with this low credit score, your application is likely to get rejected, which will further reduce your CIBIL score.
In certain instances, you may get a personal loan for CIBIL score of 550, following the conditions below-
- Higher rate of interest
Be ready to pay a heavier rate of interest if your lender agrees to sanction personal loans with a poor credit score. Also, check out the factors that affect personal loan interest rates.
- Pledge a collateral
Alternatively, you may have to keep any asset as collateral against the fund so that the lender can liquidate it in case you fail to repay the credit on time. In this case, the rate of interest might be lower as the lender remains at the lowest risk.
- Take a lower limit
Another way to get a personal loan for CIBIL score of 550 is by agreeing to a comparatively lower limit than what you need. For example, you require a loan amount of Rs. 3 lakh but due to the credit score below 550, lenders will probably sanction Rs. 1 lakh. You need to talk to your loan provider and proceed according to their terms and conditions.
- Apply for a joint loan
If your spouse is working with a steady income and also holds a good CIBIL score, you can apply for a joint personal loan with them. This allows you to enjoy a substantial amount of credit at an attractive rate of interest. If you fail to repay the loan on time, the financer will demand the repayment from your spouse.
To apply, you can proceed with an instant loan app or the official website of your lender.
- Show alternate income source
Loan providers also consider job stability as a positive factor in approval. Hence, try to show strong additional sources of income, which state your repayment capability, irrespective of the low CIBIL score.
Check out more about how to get a personal loan at lower credit score.
Factors that may have affected your CIBIL score
Following are some of the many factors that may have reduced your CIBIL score below 750:
- The credit utilization ratio on the credit card crossed 50% or exceeded the credit limit
- An unbalanced credit mix, probably contains the maximum number of unsecured loans as compared to the secured ones
- Failure in timely payment of bill
- More hard inquiries conducted in recent days
- Mistakes in the credit report, etc.
It is, therefore, recommended to improve your credit score before applying for an unsecured personal loan. You can do so by paying all dues on time, making timely EMI payments, closing existing loans, keeping the credit utilization ratio below 50%, maintaining a healthy credit mix, keeping a check on credit reports frequently, etc.
Once your credit score is above 750, you can easily apply to avail the best features and benefits from reputed NBFCs. Either submit the online application form or check pre-approved offers on the instant loan app or official website.
Pre-approved offers are designed for existing customers to make the application process simpler and less time-consuming. These offers are available on personal loans, business loans, any kind of loan or credit card, and a host of other financial products. Provide your name and phone number to check your pre-approved offer online instantly.
