Personal Loan for CIBIL Defaulters

Some NBFCs and new-age fintech lenders have started offering personal loans to applicants having poor credit scores. However, they charge higher interest rates to compensate the higher credit risk associated with such applicants. Hence, individuals having poor credit score should widen their search for availing personal loans. The best way to do so is to visit online financial markets like Paisabazaar.com, which list personal loan offers from a wide-range of lenders, including new-age fintech lenders, based on the applicant’s credit score, monthly income and other personal loan eligibility criterion.

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Note: Rates as of 19th November 2024

Apart from the credit score, lenders also consider the applicant’s repayment capacity, job stability and employer’s profile while evaluating personal loan applications. Thus, personal loan applicants working with government, public sector organizations, MNCs and top or highly rated private sector companies are usually preferred by the lenders due to their higher income certainty and job stability. Hence, some lenders might still approve the personal loan applications made by such applicants despite their poor credit behaviour in the past.

Also Know: How to get a personal loan when you have a low CIBIL score 

Adding an earning family member as a co-applicant decreases the credit risk for the lenders as the co-applicant also becomes equally liable for the timely repayment of the loan. Hence, adding a co-applicant with a good credit score and adequate monthly income can increase the chances of availing a personal loan. As the income of the co-applicant is also considered while evaluating the loan amount eligibility, adding a co-applicant having adequate income can also help in availing bigger loan amount.

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Just as in the case of co-applicants, adding a loan guarantor reduces the credit risk for the lenders as the guarantor also become liable for the loan repayment in the event of loan default by the primary loan applicant and co-applicants, if any. Lenders usually ask for loan guarantor when they are not convinced of the repayment capacity and credit profile of the loan applicant and co-applicant(s), if applicable.

In case you are still not able to secure a personal loan due to poor credit score, you should start considering various secured loan options offered by lenders. Secured loans have lower credit risk for the lenders as they can sell the collaterals submitted by the loan applicant in the event of loan default. This leads lenders to put lower emphasis on credit score while evaluating secured loan applications. The following secured loan options might help the applicants with low credit scores to avail personal loans.

• Gold Loan: The lenders offering gold loans do not factor in the credit score of the applicants. Therefore, the applicants with poor credit scores can provide their gold jewellery as collateral to the lenders in order to avail gold loan.
• Loan Against Property: The applicants owning a property (residential or commercial), can opt for loan against property to meet their financial requirements. This loan scheme should be especially helpful for those seeking larger loan amounts and for longer tenures.
• Loan Against Securities: Applicants having investments in mutual funds, shares, debentures, insurance policies, ETF, etc. can leverage these securities to avail loans. The loan amount offered against these securities would depend on their LTV ratios set by the lenders.

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Once you avail the personal loan or secured loan to meet your financial requirements, ensure to fetch your credit report at regular intervals. This will help you to take corrective steps for improving your credit score. You can either fetch free credit reports from the each of the credit bureaus once in a year or alternatively visit financial marketplaces like paisabazaar.com to fetch free credit reports and their monthly updates.