Personal Loans are convenient funding options that are collateral-free and do not pose any end-use restrictions. Applying for a personal Loan through an urgent loan app makes the funds available in minutes. However, lending institutions check several parameters while considering loan eligibility and interest rate. The credit score is one of the essential parts of this assessment.
A credit score of 750 or above indicates a borrower’s ability to pay EMIs on time. That is why most lending institutions prefer applicants with a decent CIBIL score. A low credit rating often leads to loan rejection, making it difficult for low-score individuals to get loans through a loan application app. However, be aware of these elements to improve the chances of getting a personal Loan with a low CIBIL score.
Why Does CIBIL Score Matter?
Lending institutions assess an individual’s creditworthiness by checking their CIBIL score. Those with a credit score of 750 or above are considered low-risk borrowers and have higher chances of approval. Credit bureaus calculate the credit score based on an individual’s repayment habits, outstanding commitments, credit mix, etc. In contrast, those with a low CIBIL score have a poor credit history, and loan providers perceive them as high-risk borrowers.
A high CIBIL score increases an applicant’s creditworthiness and improves their chances of getting bigger loans with faster approvals and lower interest rates. That is why the CIBIL score matters when applying for a loan through an urgent loan app.
Factors That Lower the CIBIL Score
The CIBIL score primarily depends on four factors:
- Credit Exposure
- Payment history
- Loan duration
- Credit type
Timely repayments, lengthier credit history, diverse credit types, and lower credit exposure result in higher CIBIL scores. However, here are a few factors that lower the credit score:
- Exceeding the credit card limit, leading to a high credit utilization ratio
- Multiple hard inquiries on the credit report in a short period
- Late or missed payments, including loan EMIs and credit card bills
- Unhealthy credit mix
- Errors in the credit report, which the individual must identify and report immediately
Ways to Get a Personal Loan with a Low Credit Score
Although the CIBIL score is one of the most crucial factors determining eligibility, lenders check several other parameters to approve loan applications. Here are a few ways out:
- Loan Amount: Figure out the purpose of taking the loan and calculate how much you need to borrow. Evaluate the expenses you require the loan for and decide the loan amount accordingly. Applying for a smaller loan amount increases the chances of approval despite a low CIBIL score.
- Eligibility: After deciding the loan amount, check whether you fulfill the lender’s eligibility criteria. Open the app description and check the eligibility conditions. These include the applicant’s age, citizenship, income, financial obligations, credit score, etc. If you fulfill other eligibility conditions satisfactorily, the lending institution may consider approving the loan application.
- Monthly EMIs: Use a Personal Loan EMI calculator to calculate the approximate EMI amount to pay each month. Modify the loan tenure or amount based on your monthly income and repayment capacity until you find a loan plan with affordable EMIs. Opting for the correct loan tenure will assure timely repayment and improve the chances of approval.
- Apply with a Co-Applicant: If a co-applicant agrees to guarantee the loan, receiving the loan with a poor credit score becomes possible. While evaluating the loan application, the lending institutions evaluate the credit profiles of both applicants. Choosing a co-applicant with a solid credit score and stable income boosts the chances of approval despite a low credit score.
- Prove a Decent Income: Giving proof of a stable and decent income convinces the lender of timely repayment. Since Personal Loans are unsecured, lending institutions expect a stable financial position while approving them. Those with a decent income have higher chances of repaying on time, encouraging the loan provider to take the risk.
Getting a Personal Loan using an urgent loan app is no longer a distant dream for individuals with low CIBIL scores. Using the tips mentioned above, they can get Personal Loans at competitive rates, with flexible repayment terms and minimal documentation. So, download an authentic loan application app from a reputable lending institution and get the needed funds without hassle or stress.
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