Your CIBIL score is very important for loan approval. Lenders use it to determine your creditworthiness. If you have a low CIBIL score, then it becomes quite difficult to qualify for a loan. But things have changed with the rise of digital lending platforms. Today, many fintech apps and NBFCs evaluate borrowers using additional factors instead of entirely relying on credit scores.
These lenders assess borrowers’ creditworthiness by looking at their income stability, repayment ability, employment history and banking behaviour and approve the loan. In this blog, we will understand what actually works when applying through a loan app for low CIBIL.
What is a Low CIBIL score?
A CIBIL score is a score generated by TransUnion CIBIL, one of India’s leading credit information bureaus. The score is a reflection of your credit history based on your financial behaviour. In general, the CIBIL score can range from 300 to 900. This is how it’s interpreted: –
A lower score can be due to poor repayment history or limited credit history. Many traditional lenders prefer a high score, whereas digital lenders take into consideration alternative data.
How Loan Apps Evaluate Low CIBIL Borrowers?
Previously, a credit score was the major factor taken into consideration for loan approval. But today’s digital lenders use multiple indicators. Some of them are: –
A loan app for low CIBIL can approve the applicant’s loan based on their present financial condition. Then it doesn’t matter even if the past credit history is not good.
What Works When Applying for a Personal Loan?
Here are certain tips that work when you apply for personal loan for low CIBIL Score: –
1. Have Stable Income Proof
Income plays an important role in loan approval. Whether you are salaried or self-employed, lenders generally will give preference to applicants who have a regular source of income. You can provide income proof like salary slips, bank statements, or business income records to make your application strong. To secure a personal loan for low CIBIL, strong income proof will improve the lender’s confidence in your repayment ability.
2. Apply for Smaller Loan Amount
When you have a low credit score, it’s advisable to apply for a smaller loan amount that matches your repayment capacity. Smaller loans have lower risk for lenders, so there are higher chances of approval. A loan app for low CIBIL will easily approve a lower loan amount as compared to a high-ticket loan amount.
3. Lower the Existing Debt
Lenders check your existing liabilities before approving loans. If you have to many ongoing debts, then your repayment capacity reduces. Hence, it’s advisable to reduce current debt to improve the eligibility for a personal loan with a low CIBIL score.
4. Check RBI-Regulated Lending Platforms
Borrowers should never apply for a loan from unregulated apps. They shall always apply for a loan at an RBI-registered lender. Here is what the borrower should check before applying: –
5. Read the Key Statement Carefully
As per RBI regulations lender have to provide Key Fact Statement (KFS) to the borrowers. It shall include complete details about interest rates, processing fees, loan tenure, EMI amount and additional charges. Low-credit borrowers shall read this carefully, as at times they have to face higher borrowing costs.
How to improve CIBIL score?
Yes, many loan apps offer personal loan for low CIBIL borrowers. But still, it’s advisable to improve the CIBIL score to improve the chances of loan approval. Here are the tips to help you: –
Conclusion
Getting a loan with a low CIBIL is tough but not impossible. Due to the rise in digital lending platforms, now many lenders offer loans even to borrowers with low CIBIL scores. These loan apps don’t just rely on credit score but consider various other parameters to evaluate the loan application.
However, before applying through a loan app for low CIBIL, you shall make sure to review the loan terms, charges and repayment conditions properly. It’s also advisable to apply for a smaller loan amount and have stable income proof. Borrowers shall also work on improving their CIBIL score through timely repayments and better credit habits.
