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It’s crucial to have a good CIBIL score. However, it takes 1-2 years to improve this score. And it becomes problematic when you need a loan instantaneously. What do you do in such a situation? Can you get an instant loan without a CIBIL score? This article will guide you on ways to avail of a loan with a low or zero CIBIL score.
When you visit a bank to apply for any loan, the bank first checks your 3 digit CIBIL score before approving your loan application. This is to assess whether the borrower will pay back the loan amount within the given period. CIBIL or Credit Information Bureau Limit is an organization that maintains the data, such as the credit history of all the individuals and businesses. Banks and Financial institutions share their credit data with CIBIL. Based on this data, a CIBIL score of a particular individual is determined. Through this score, the bank checks the creditworthiness of the borrower before offering him a loan.
The CIBIL score ranges from 300-900. This score depends upon your repayment history, credit card utilization (a high credit card usage reduces your score), the number of times you apply for a loan, loans for different purposes (this helps in improving your CIBIL score). A high CIBIL score indicates cheaper and instant loans, while a low or bad CIBIL score means the opposite. Typically, a credit score between 300 and 699 is considered as a Bad or low CIBIL score. Banks tend to offer loans to individuals falling within the 750 –900.
When your CIBIL score drops below 750, that’s when the problem starts. Banks and NBFCs are reluctant to offer loans to individuals falling in this category, and even if they do, the interest is 0.5%-2% higher. So if a person with a good CIBIL score is offered a loan at an 8% interest rate, the other person with a low CIBIL score will be offered the same loan at 10-11%. And if the score falls below 700 (mainly due to defaults made in paying pack the previous loans), the banks will not offer any loan.
If your spouse’s CIBIL score is good, you can take a joint loan. Under joint loan, the CIBIL score of both the husband and wife will be considered. Or you can take a loan in your spouse’s name. This helps you in getting home loans and other bigger loans at the best interest rate, even with a low CIBIL score.
If you are not getting a loan or have a zero credit history, in such cases, you can ask your parents, siblings to be your guarantor. Make sure the person whom you are adding as a guarantor has a good CIBIL score. This method is generally useful when you want to avail an education or personal loan etc.
Apart from the other options mentioned above, availing of a loan against security is also a viable option. Thus, you can apply for a loan against your house, fixed deposits, LIC policy, Mutual funds or shares, gold, PPF, Credit cards, etc.
Navi loan is a platform that provides instant personal as well as home loans to middle-class Indians. The process to avail of the loan is simple and can be completed within 5 minutes. You can download the app from the Google play store and provide the required information needed to check loan eligibility.
The personal loans are transferred instantaneously to your bank account once your loan application is approved and can be repaid in equal monthly installments. All you need is an AADHAR Card, PAN Card, i.e., KYC documents, and property details (in case of a Home loan). Once the KYC process is completed, the cash is disbursed to your bank accounts.
When you are given an unsecured loan, it’s important to have a good CIBIL score, as it ensures the lender about your creditworthiness. Check how to improve your CIBIL score.
No, secured loans are not available against term insurance. They can be availed only against endowment or whole life insurance (as there is a money-back guarantee).
Apart from the four ways aforementioned in the article, you can also visit private lenders. However, the private lenders charge a very high rate of interest, i.e., 24%-36% per annum. The loans are given against a mortgage and only beneficial if taken for a short period.
For getting a loan under Peer to Peer lending system, you don’t need to have a CIBIL score. Here unlike private lenders, who are individual lenders, there are private lending companies who offer loans at interest rates lower (i.e., 15%-30%) than the individual private lenders. You can also invest here.
No, P2P lenders only provide personal loans.
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