Lenders look at your credit score or CIBIL score to determine your credit history – The amount of credit you have taken, how you have returned it, and other relevant factors.
Since a personal loan is an unsecured loan and the lender has no other assets to fall back on, all of this information aids the lender in determining whether or not offering you a personal loan is a dangerous venture.
Do you have a low credit score and are worried about getting a personal loan? It’s undoubtedly challenging, but there are ways you can make it happen. Read on to learn the necessary steps to get a personal loan with a low credit score.
5 Ways to Get a Personal Loan Witha Low Credit Score
Although you may have heard that having a low CIBIL score prevents you from qualifying for a personal loan, this isn’t completely true. By taking these 5 steps, you can obtain an instant personal loan with a low credit score.
Provide Substantial Evidence of Your Income
One of the most important factors when applying for a loan with a low credit score is having proof of income to show the lender that you can afford to make the loan payments. Lenders will want evidence of a steady income before approving a loan.
This could include pay stubs, tax returns, or proof of other sources of income such as child support, rental income, or disability benefits.
Apply for a Lower Loan Amount if Possible
When you have a low credit score and ask for a bigger loan, it can make a lender suspicious or concerned. They may go on the back foot. So, it’s better to apply for a smaller loan amount. This will make it easier to get approved, as the lender won’t be as concerned about your ability to pay back the loan.
The smaller loan amount will also help reduce the risk the lender takes by giving you a loan.
Find a Co-signer or Guarantor
A co-signer applies for a joint loan with you where both of you are responsible for paying back the loan. A guarantor is someone who agrees to take on the loan responsibility if you can’t make the payments.
Convince any of your close friends or family memberto apply for a joint loan or act as a guarantor for you.It can improve your chances of getting approved.
Review & Correct Your Credit Report
What if your bad credit rating is a mistake? Yes, it’s possible that there can be errors in your credit report. Check your credit report for any errors. If you find any mistakes, you can report them to the concerned authority to get them corrected.
This can help improve your overall credit score and give you a better chance of being approved for a loan.
Request Consideration if You are New to the Credit
You probably don’t have a credit score if you have never used credit. The credit report on your name indicates this as NA/NH. Alternatively, if a credit history record is dormant for longer than 36 months, it will appear on your credit report as NA/NH.
If this is the case, you can explain the cause of your lack of credit history to the lender. They may approve your loan request with a higher interest rate.
Getting approved for a loan with a low credit score can be tricky, but it’s not out of the question. If you follow these 5 tips, your chances of getting the loan you need can greatly improve.
One key point to remember is that you’ll probably have to accept the terms and interest rates presented to you by the lender. So if you’re ready to commit, your loan is not a farfetched dream anymore!
Author Bio: TanviKaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail quick loans online in just a few minutes when in need of emergency funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.