Avail Personal Loan Without CIBIL Verification

Your CIBIL score is one of the first things a lender looks at when applying for a personal loan. This information assists banks and lending organizations determine borrowers’ creditworthiness and ability to repay a loan. So, does this imply that only those with a good CIBIL score are eligible for a loan?

What personal loan means in general?

A personal loan is a sum of money that you can borrow for various purposes. You could use a personal loan to restructure debt, pay for home upgrades, or organize a dream wedding. Banks, credit unions, and Internet lenders offer personal loans, where you must repay the money you borrow over time, usually with interest. Personal loans may be subject to fees from some lenders.

What is CIBIL and CIBIL or credit score?

CIBIL is an acronym for Credit Information Bureau India Limited. In India, CIBIL is the most well-known credit reporting agency. It gathers and retains client information related to loans and credit. The CIBIL score check is made using information from the CIBIL Report’s ‘Accounts’ and ‘Enquiries’ sections, which includes (but is not limited to) loan accounts or credit cards, payment statuses, outstanding amounts, and days past due. A CIBIL Score ranges from 300 to 900, and the closer it is to 900, the more likely a consumer’s credit card or loan application will be granted. Online CIBIL score requests can be made to keep an eye on your credit score. 

A credit score is a three-digit numerical summary of a person’s credit history and a representation of their credit profile. A consumer’s credit score is also known as a CIBIL Score. This is based on previous credit behaviour, such as borrowing and repayment practices, as reported to CIBIL regularly by banks and lenders. In the loan underwriting procedure, the CIBIL Score is crucial. Before approving your loan or credit card application, lenders will undertake a CIBIL score check to learn more about your credit profile, behaviour patterns, and repayment history. 

If you have a good credit score, then you have nothing to worry about. You will easily get your loan approved, and you may have greater benefits. But when you have a low credit score, it reduces your chances of getting your loan approved.

What are the Reasons For a Low Credit Score?

Now you know that a bad credit score will negatively impact you, and now we need to know the reasons for a low credit score. They are:

Poor Payment Track Record

Your payment history is one of the variables contributing to a low CIBIL score. Your credit score will suffer if you miss a payment on a loan. When you default on the loan EMIs or make late payments, negative credit is developed, and the credit score eventually plummets. If it defaults even once, the CIBIL score will be affected. Aside from that, the credit score will suffer as a result of inconsistent and irregular payments.

A High Credit Utilization Ratio

The total credit used divided by the total available credit limit across all credit card and loan accounts yields the credit utilization ratio (usually calculated every month). A high credit usage ratio (more than 30%) denotes a greater reliance on credit and a possibly significant payback load.

Multiple Loans

When multiple loans are requested simultaneously, the credit score suffers. This is because you have filed for many loans at several banks, the debt burden has increased while the ability to repay them has decreased. This is true not only for borrowing money but also for using credit cards. If the number of credit cards you have and the amount owed on them increases, it impacts the ability to pay back the loans. 

Inaccuracies on your CIBIL Report

Errors on your CIBIL Report, such as an incorrect statement of default in repayments, errors in current loans/credit cards mentioned, and so on, can harm your CIBIL Score. Additionally, banks’ incorrect or delayed loan status reporting may appear as erroneous information on your CIBIL Report, significantly impacting your score. These could be administrative errors, or they could suggest criminal activity, such as identity theft. To initiate a CIBIL score check, you need to file a CIBIL dispute immediately and prevent any anomalies. 

Wrong Loan Mix

You must have the proper loan mix in the credit portfolio. The optimal loan mix is having a balance of secured and unsecured loans. Unsecured loans are ones for which the bank has received no collateral. The CIBIL score will suffer if you have unsecured loans. On the other hand, secured loans are those for which the bank receives collateral in some form or another in exchange for the loan. If you cannot repay the loan, the bank may be able to encash the collateral by selling it and obtaining the funds necessary to pay the sum owing to them.

How can a Low Credit Score Affect You?

You know now the reasons why you can attain a bad credit score. You also need to know why we should not have a low CIBIL score. CIBIL score check will help you understand where you stand in the credit scoring, and if it is on the poor scoring scale, it has negative impacts on you in the following ways:

Approval of a Loan or Credit Card

A low credit score indicates a lack of creditworthiness, thereby causing the lenders to reject your application. Any default or delay in loan repayments is noted in the applicant’s credit report, which lending organizations check before approving any loan or credit card.

Renting a House

Many landlords may question your credit history when renting a home to assess your credit management and financial stability. If you’ve been paying your loan EMIs and credit card bills on time, your credit score will improve. In turn, this will have a good impact on your rental contract. However, a low credit score may also limit your career opportunities because a prospective employer may inquire about your credit history to determine how effectively you manage your finances. It will also show up in your credit history if you haven’t been attentive to your credit.

Higher Loan Rates Mean Smaller Benefits

If you have a bad credit score, your credit application is more likely to be denied or authorized at higher interest rates. The consequences of a poor credit score are obvious. It may not have an immediate impact on you, but it may impact the future. As a result, a regular CIBIL score check is made monthly once or once every quarter can avert any negative consequences.

What are the ways to improve your low CIBIL score?

Online CIBIL score check will help you understand your financial profile, and you can then imagine its impact on your life. A high CIBIL score (750 or higher) implies previous financial management and improved repayment potential. It enables you to obtain additional credit more easily and in more favourable conditions. If you have a bad credit history and a low CIBIL score (650 or lower), you can improve your credit score over time by following the easy suggestions and practices listed below:

Make timely payments on credit card balances and loan EMIs

Paying your EMIs and credit card bills on time and in full improves your CIBIL score because it demonstrates responsible credit behaviour. Keep doing so over time, and you will be able to increase and maintain a good score.

Maintain a Balanced Mix of Secured and Unsecured Credit

A balanced mix of secured and unsecured credit is preferable. It demonstrates caution in obtaining and using credit instruments, which improves your credit score.

Maintain a Low Credit Usage Ratio

Your credit utilization ratio shows how much you rely on credit. Maintaining a low credit usage ratio (often 30% or less of the total available credit limit) indicates a decreased reliance on credit and, as a result, a lesser payback load. This is a sign of responsible credit behaviour, and it improves your CIBIL score.

Only Settle Your Debts as a Last Resort

Instead of settling your obligations, strive to pay off your existing debts in full. The settlement should only be used as a last resort because, while it will reduce your debt burden, it will also indicate a lack of financial prudence, which will negatively impact your CIBIL score.

Regularly Review and Monitor Your Credit Report

Keep an eye on your credit report for any administrative problems or probable fraudulent activity. If reported and corrected utilizing the CIBIL Dispute resolution procedure, these inaccuracies can help you enhance your CIBIL score.

When Applying for New Credit, Use Caution

Only apply for new credit if you truly need it. Keeping the number of new applications under control will help you retain a high score by preventing multiple hard inquiries from appearing on your report.

How to avail of a Personal Loan Without CIBIL?

Your CIBIL score is one of the first things a lender looks at when applying for a personal loan. This information assists banks and lending organizations determine borrowers’ creditworthiness and ability to repay a loan. So, does this imply that only those with a good CIBIL score are eligible for a loan? 

No, a borrower can obtain a loan despite a low or non-existent CIBIL score. You don’t have to stress yourself if you have a low CIBIL score and if you don’t have time to improve your scores. You can step up and have an online CIBIL check done to know your score. There are other ways of how you can avail a personal loan without CIBIL. Have your CIBIL score check done and if you have a low credit score, read on to know the other options.

Let’s have a look at some of the options for getting a personal loan without a CIBIL score:

Choose Collateral-Based Loans

Personal loans are typically collateral-free and require no security, but this is only true if you have a good credit score. On the other hand, if you have a bad credit score or none, you will be required to put up collateral for a personal loan. For example, any of your valuable possessions might be used as collateral for the loan. It will be easier for you to obtain a loan from the lender of your choice if you do so.

Apply for a Personal Loan with a Co-applicant or a Guarantor

Applying for a personal loan with a co-applicant or a guarantor will boost your chances of getting the loan authorized. Make sure the guarantor has a consistent income, and if your co-applicant is a family member, you should notify them about your plans to take for a personal loan ahead of time. The co-applicant must complete the KYC process to apply successfully. If the co-applicant satisfies the criteria, the lenders will likely approve your loan application after reviewing the bank statements and credit history.

Demonstrate your Creditworthiness

When approving a loan application, the lender looks for a creditworthy applicant. You can obtain a personal loan from any lender if you have a steady source of income. Even if you have a bad credit score or none at all, displaying your pay stubs or bank statements as proof of income is a good idea. This will reassure the lenders that you will be able to repay the loan on time.

Check your Credit Report

It’s always a good idea to double-check your credit report because your credit statement may contain inaccuracies. Such mistakes might have a significant negative influence on your credit score. As a result, you should always conduct a CIBIL score check and address any inaccuracies as soon as possible. In the case of such inaccuracies, you can register a dispute with CIBIL. This will not only help you boost your CIBIL score, but it will also make getting a personal loan easier. 

Apply for a Lower Loan Amount

If you have a poor CIBIL score, it’s recommended to avoid requesting a greater loan amount because the lender may be hesitant to sanction your loan due to creditworthiness concerns. As a result, it is preferable to apply for a smaller personal loan amount because the interest rates will be lower. This will improve your chances of obtaining the loan accepted in the end.

Request a NA or NH on Your Credit Report From Your Lender

Your credit report’s History Not Available (NA) or No History (NH) indicates that you have had no previous credit activity or credit in the recent 36 months. In such circumstances, you might discuss your credit inactivity with your lender. Your situation will be taken into account by the lender, and you will most likely be offered a personal loan with a somewhat higher interest rate. Check online CIBIL score to know whether you have a credit history or not. 

Demonstrate that Your Salary is Sufficient to Cover EMI Instalments

Even if you have a low credit score, a lender may consider your application for a personal loan if you have gotten a raise in your pay or have an additional source of income. Despite a low CIBIL score, if you can demonstrate to the lender that you have a solid job and consistent income, they are more likely to issue you the loan. When you establish your eligibility in this way, you may have to pay a higher interest rate.

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