Know how to Get a Loan Even at a Low CIBIL Score

One of the most common reasons for loan rejections in India is the lack of a proper credit rating. Various credit information companies determine the creditworthiness of an individual by maintaining a record of their past repayments, credit usage, and more. Thus, a credit score is often the first thing that lenders check when receiving a loan application from potential borrowers.

Individuals with impressive CIBIL scores are preferred, with lenders reserving the most favorable terms on their financial products for these borrowers. This is true for both unsecured debt and secured advances, such as a home loan.

Even though there is an upsurge in loan applicants, many face challenges in meeting the housing loan eligibility criteria due to low CIBIL score.

To help overcome this obstacle, here are some tips to pass the home loan criteria even when your credit rating fails to meet the minimum requirements.

Tips to secure a loan even at a low CIBIL score

1. Maintain timely repayment records

The primary rule to maintain a good CIBIL score is to repay the outstanding balance on time. If an individual is a defaulter or has been avoiding EMI repayment, credit score suffers a blow, leading to financial issues.

Before applying for a home loan, it is recommended to ensure that one has a record of timely payments on outstanding balance like credit cards and other dues. Providing these factors improves the chances of getting swift loan approval and clearing the housing loan eligibility criteria.

2. Reduce loan principal

Lenders might refrain from sanctioning loans to a risky customer borrowing a substantial amount with a low credit score. Therefore, applying for a limited amount is the wiser choice in case one’s credit score is below 750.

Availing smaller sums and repaying them on time increases a borrower’s creditworthiness, paving the way for approval of higher loan amounts in the future. One can also use a home loan eligibility calculator to determine the exact amount they can avail.      

3. Take a loan from HFCs

If an individual has a low credit score, but there is an urgent need for funds, taking a loan from housing finance companies will be a smarter choice. Most of the HFCsfollowflexible home loan criteria for customers with low credit ranking.

Many HFCs also provide pre-approved offers to eligible customers, reducing the time-consumption for loan applications. Pre-approved offers are available on personal loans, business loans, credit cards, and several other financial products. You can check your pre-approved offer online by entering a name and contact number.

4. Show financial record

Many financial institutions consider factors like current salary or stable income sources along with a 750+ CIBIL score. If one has a low credit rating, the individual can offer account statements and salary slips, which may encourage lenders to reconsider risk assessment.

Showing a record of sufficient funds creates credibility that an individual is competent enough to repay the loan timely, quickening the loan disbursal procedure. Knowing how to calculate home loan eligibility can help when determining whether one can avail such funding.

5. Apply for a joint loan

Even when a borrower has a low CIBIL score, loan disbursal can be quick if there is a guarantor or co-applicant. Taking a joint loan ensures that during an emergency, the co-applicant can service EMIs on behalf of the borrower. One thing to remember here is that the co-borrower should meet all housing loan eligibility criteria to avail of such credits.

For instance, a lender will be more inclined to sanction loans provided that the co-applicant maintains a 750 or above CIBIL score. There are multiple benefits of taking a joint home loan as it helps in getting a better deal on the loan amount and improves the chances of loan approval.