Need a Personal loan?
In accordance with the procedure you are familiar with, you will need to provide the bank with your Aadhar card, your PAN card, and your income statement or salary slip. The funds are disbursed to your bank account after verifying your CIBIL score and other documents. However, to deal with customers’ emergency requirements, lenders have introduced the concept of instant personal loans with a low CIBIL score.
But before we understand how to avail of a quick cash loan without a CIBIL, let’s try to get some basics in place.
What is a CIBIL Score?
A CIBIL score ranges from 300-900, which is allocated to a loan requestor based on his credit profile. It is determined by considering one’s past performance of repayment and credit management skills. A Higher CIBIL score indicates a higher repayment probability of a loan and vice versa. Any score above 750 is considered a good score and indicates the requestor’s capability to repay the loans without concern.
In India, four agencies track the credit history of income-earning individuals. Among them, TransUnion issues a CIBIL score which is considered the country’s most acceptable credit rating.
How is a Cibil Score calculated?
Here are a few factors that determine the CIBIL score.
1) Repayment pattern:
The weightage assigned to the repayment pattern is high. It summarizes the historical repayment, compliance with EMI timelines, etc. Any instance of non-repayment or delay in payment indicates that the requisitioner lacked funds. This has a negative impact on the CIBIL score, and consistent repayment, on the other hand, increases the score.
2) Consumption of credit:
The weightage assigned to credit consumption is high. It indicates the loan consumed against the loan sanctioned.
For instance, you can avail a loan of Rs. 1,00,000. But you opt to take a loan of Rs. 75,000 only. In this case, the credit utilization ratio is calculated by taking the balance to the amount sanctioned (25,000/1,00,000, which is 25%). Industry experts suggest maintaining it below 30%.
3) Credit period:
The weightage assigned to the credit period is comparatively low. It is the period for which you are holding the credit. Suppose you took a loan for five years and repaid within timelines vs. you took a loan for 15 years and conceded with EMI payment schedules. The one with 15 years will positively impact the credit score compared to the 5-year loan. The reason being it indicates your capability to manage credit and payment of EMIs for a longer duration.
4) Credit mix:
When evaluating the cibil score, the weightage assigned to the credit mix is lower. It indicates the combination of secured and unsecured loans that one maintains in their portfolio. It is generally recommended to opt for both options. Repayment of both secured and unsecured loans within due dates creates a sense of responsibility on the part of the requisitioner, which adds to the CIBIL score.
How to improve CIBIL score?
Although you can avail of an instant loan without a CIBIL, it is recommended that you improve your CIBIL score. It can easily be rectified by following the below-mentioned steps:
- Always set reminders for payment of EMI to ensure compliance.
- Consider continuing all the old credit cards unless you find it difficult to manage expenses; it creates an illusion of better credit management.
- Opt for loans with a more extended credit period.
- Never take more than one loan at once.
- Try not to accept the role of guarantor in any loan.
- Check your CIBIL score regularly to minimize errors/ misstatements, if any.
- Maintain a credit mix of both secured and unsecured loans.
- Always accept if the bank is willing to sanction a higher credit card limit.
All these steps shall increase your CIBIL score in 6-12 months.
Steps to avail of instant personal loan for low cibil score:
1) Take a Loan from a known lender:
A low or no CIBIL score at the outset indicates that the requestor is unable to repay the loan. Therefore, not all lenders will be willing to sanction you a loan. Only a handful of lenders provide this facility based on your personal connection with the lender. Reach out to such lenders for your loan requirement
2) Loan based on your income:
If you are opting for a loan for the first time, then obviously, no CIBIL score is assigned to your profile. In such cases, you may get a loan sanctioned based on your income statement/ salary slips. The loan amount to be approved depends on your income and the period of employment.
3) Accept higher interest rates:
The next option available if you do not have a stable income is to accept a loan with a higher interest rate. Based on the loan period and your capability to repay, decide on the viability of opting for a higher interest rate
4) Go for a joint loan:
In case you do not have a good CIBIL score, then opt for a joint loan with your spouse, where both the CIBIL scores are aggregated to finalize the score. If your spouse has a decent score, then the chances of getting a loan sanctioned increase. If not, you may opt to get a loan approved in the name of your spouse as well to ensure you get an instant loan without cibil.
5) Find a guarantor:
If any of the above options are not viable, opt to find your immediate relative or close friends to act as a guarantor for the loan. Ensure that the guarantor has a decent CIBIL score in place. With this option, you can get a loan sanctioned with the primary responsibility to repay. However, in case of default, the guarantor will reimburse the same.
6) Opt for collateral security:
This is the most popular way to get a low cibil score instant loan. One may also opt for a personal loan by submitting collateral security such as gold. There is less risk for the lender since, in case of default in payment of EMI, the lender may opt to sell the gold and convert it to cash. The amount of loan to be sanctioned is slightly less than the market value of the collateral asset.
Winding up:
To conclude, with the changing times, there are many ways to get an instant loan without a CIBIL. Many factors determine a lender’s willingness to lend money to individuals. All that you need to do is find the right lender who agrees to sanction a loan with minimum or no documentation and offers an option that best suits your current situation,
