CIBIL scores indicate creditworthiness, capacity, and ability to repay your loan to allow your score must be at least 750. It is easier for you to get a loan approved closer to 900 at a better interest rate and on better terms. In addition, it helps in the collection and maintaining records of Individual payments affecting loans and Credit Card.
Roles of CIBIL:
CIBIL stands for Credit Information Bureau (India) Limited found India’s first Credit Information Company in August 2000. After an organization, CIBIL played a vital role in Indian Financial System. It helps in collecting and maintaining records of Individual payments affecting loans and Credit Cards. The member bank and all the credit institutions submit their documents to CIBIL every month. That information received from banks and credit institutions would create a Credit Information Report and Credit Score provided to credit institutions to help evaluate and approve loan applications.
Function of CIBIL
- The Consumer Bureau of CIBIL keeps its dynamic information repository of India for providing its members comprehensive risk management tools.
- Consumer Credit Information is an essential tool used by credit grantors at the time of new customer acquisition.
- Portfolio Review provides the credit grantor with a comprehensive view of their borrower’s credit relationships across multiple lenders.
Getting a Personal Loan With a Low CIBIL Score
Even so, it is a challenge, where you can still get a personal loan with a lower credit rate by taking the measures are listed below:
The evidence of Income to Support Loan RepaymentsYou has a low credit rating but a hike in salary or possibly having an additional income to make the lender more favorable for your loan application. In addition, if you show proof where you have a secure job with a steady income, the possibility of your loan getting approved increases too. However, please make note that it may be subject to a high interest rate.
- Review to Apply for a Low Personal Loan Amount
Your lender may consider you a high-risk candidate if you ask for a high personal loan amount with a low CIBIL score. This is because, from the lender’s point of view, the loan repayment probability is more increased.
If the personal loan amount is low, the lender may be willing to grant the loan request. Also, the repayment of a low amount will be more manageable.
- Applying for a Joint Loan or Get a Guarantor
If you have a low CIBIL score, getting a co-applicant or guarantor with a reasonable credit rate can help you get the personal loan faster—the co-applicant or guarantor to ensure complete KYC formalities along with the required sign in the suitable form.
When the lender saw a co-applicant or guarantor with an excellent CIBIL score on your loan application, it helps get a better deal.
- Resolving Errors with Credit report:
Here you may be having a hard time getting a personal loan with a low CIBIL score. However, there may be misreporting or errors in the credit report. In most cases, this happens because the records have not been updating with the latest information.
While it is not your fault, mistakes such as these can cause unwanted issues. To get ahead of the problem, regularly check your CIBIL score. If you find any errors, ensure that the report is relevant to authorities and resolve them quickly. Ultimately, it will also work favorably by raising your credit score, making you a worthy applicant for a personal loan.
- Requesting Lender to Consider Your Case with an NA or NH in a Credit report:
An idle credit period in the last 36 months or absence of a credit period during the same period will mark by an NA or NH on your credit report. Those translate you not having a credit score at all in your CIBIL report.
Speak to your prospective lender and explain why there is a period of credit inactivity. The loan may approve with a higher interest rate.
How do I check the details of my account number and member name mentioned in myCIBIL report?
To check your account number or member details, you can purchase your CIBIL Score and Report. Those reports will contain complete details of your credit history across various lenders and products, enabling you to check all the information above.
How can I improve my CIBIL score?
Here, you improve your CIBIL score by maintaining a good credit history, which is essential for loan approvals by lenders. Follow these six steps, which help you for a better score.
- All the time pay your dues on time: Late payments are view negatively by lenders.
- Keep your balances low: Always be prudent not to use too much credit to control usage.
- To maintain a healthy credit mix: It is better to have beneficial and secured (such as home loans, auto loans) and unsecured loans (such as personal loans, credit cards). It may view too many unsecured loans may be viewed negatively.
- Apply for new credit in moderation: You do not want to reflect that you are continuously seeking excessive credit to apply for new credit.
- Monitor co-signed, guaranteed, and joint accounts monthly: In co-signed, secured, or joint accounts, here, you are holding on equally with responsible for missed payments. Your joint holder’s (or the guaranteed individual) negligence could affect your ability to access the credit when you need it.
- To review your credit history frequently throughout the year: To regularly monitor your CIBIL Score and Report to avoid unpleasant surprises in the form of a rejected loan application.
Few can pay cash for a home, and many need loans to buy cars. On the other hand, credit can help us launch a new business or pay for an education. And most Americans like the convenience of using credit cards. Although improper use of credit can indeed be disastrous, credit properly used can enhance your life. As explained above, we need to know how credit scoring works. Knowledge is power, and the tools will help you take control of your credit and financial life.