Loan even on low credit score: Apply to NBFC or fintech lender
Loan even on low credit score: Apply to NBFC or fintech lender, know 3 ways to take the loan with a low score
A credit score, also known as CIBIL score in common parlance, is important for availing of a loan or credit card. A CIBIL score above 700 is generally considered good. The higher your score, the higher the chances of your loan application being approved. Most of banks and NBBCs fetch your credit score and report from CIBIL when you apply for the loan.
In case of a low CIBIL score, the application can also be cancelled. But, what if you have a low/poor credit score and need a loan for an emergency? Or if you're a new customer and don't have a credit score? So how will you get the loan?
If you have a low CIBIL score, you can apply for a loan to NBFCs or fintech lenders. NBFCs and Fintechs also offer loans to customers with low credit scores. However, their interest rates are usually much higher than the interest rates of banks. It is also important to note that if you apply to a bank and the application is rejected, it can further reduce the CIBIL score.
If the CIBIL score is less then you can apply with the co-applicant. A co-applicant can be a family member who has a good credit history and earnings. Adding a co-applicant reduces the credit risk of the lender. This is because the co-applicant is also equally responsible for the repayment of the loan. You can also make a person with a good credit score a guarantor.
Apply for small loans if you have a low credit score. Taking a small loan and its repayment will help you to strengthen your credit score. Once you have a strong credit score, you can apply for a large loan in any bank. Some banks and financial institutions offer secured loans to low credit score holders. Secured loans include gold loans, loans against property or loans against securities.