Loans
A Personal Loan is a practical financial tool for managing diverse expenses such as medical emergencies, weddings, education, travel, or vehicle purchases. To access a Personal Loan on favourable terms and at competitive interest rates, maintaining a strong CIBIL score is essential.
The Credit Information Bureau (India) Limited issues the CIBIL score, a key indicator of your creditworthiness. The score ranges from 300 to 900, where 300 indicates poor credit health and 900 reflects excellent credit discipline. A score of 750 or above is generally viewed favourably by lenders and significantly improves loan approval prospects. Applicants with lower scores may face rejection or be offered loans at higher interest rates.
Securing a Personal Loan with an average or low CIBIL score can be difficult, but certain alternatives may help.
Offering collaterals such as fixed deposits, mutual funds, or property can improve approval chances. Securing the loan reduces lender risk and may offset the impact of a lower credit score.
Many reputed organisations have arrangements with banks and financial institutions. If your employer has such a tie-up, you may qualify for a Personal Loan under preferential terms despite a lower CIBIL score. Check with your HR team for available options.
Applying jointly with a family member who has a strong CIBIL score can enhance eligibility. Lenders assess the combined credit profile, improving the likelihood of approval.
Including a guarantor with a good credit score can strengthen your application. The guarantor agrees to repay the loan in case of default, reducing lender risk.
Non-banking financial companies (NBFCs) may offer Personal Loans to individuals with lower CIBIL scores. However, these loans typically come with higher interest rates and stricter terms.