The majority of banks and financial organizations prefer applicants for loans who have a score of at least 750. Therefore, obtaining a loan would be challenging, with a score of 550 points. However, one always has a chance to improve their SBI personal CIBIL score or CIBIL score for personal loan in general. The first step in doing so is to carefully review your credit report. Find out why your score is poor; it could be due to administrative mistakes, payments that are made late, or even a high credit use rate. You may always consult a professional for assistance if you need help interpreting the credit report or with how to analyze it. First, you should be aware of the factors used by CIBIL to determine your credit score: repayment history (35%), credit utilization (30%), a mix of credit (10%), duration of credit servicing (15%), and credit inquiries made (10%). In this blog, we will talk about ways to improve your CIBIL score if you have a low CIBIL score.
Is it possible to get a loan with a credit score of 550?
Through some changes, you can surely improve your bad credit score in order to be eligible for a personal loan application. Keeping track of your repayment history by promptly paying off all of your credit cards and EMIs, gives you a perfect rating for this. Additionally, a high credit utilization ratio is extremely dangerous and will lower your credit score. Keeping this under control will also require you to think about reducing your liabilities. Having a variety of credit, such as credit cards, personal loans, and auto loans, can help you raise your CIBIL score for personal loan. By monitoring your payments and making them on time, you can extend the duration of your loan or improve your credit rating. Limiting your credit inquiries also has an impact.
Apply for a low-value loan: Lenders consider people with low credit scores as red flag applicants as that indicates problematic previous credit behaviour or ongoing debt obligations. Thus, lenders are reluctant to approve loan applications from consumers with such scores. This is why if your CIBIL score for personal loan isn’t up to par, applying for a small loan amount could make it simpler for you to get approved. When compared with a high-value loan, the risk to the lender is lower with a low-value loan. For the best outcomes, use a personal loan eligibility calculator to see how much of a loan you are qualified for before applying.
Submit an application with a co-applicant or guarantor: Applying for a joint loan can help because a low SBI personal loan CIBIL score indicates a higher likelihood of default and an increase in risk for the lending. If you apply with a co-applicant or guarantor, they are responsible for repaying the loan in the event of your default. As a result, the lender’s risk is reduced, which can make the more willing to approve your loan application, and they can even forgo the CIBIL score for personal loan on an individual basis. Remember that this is only beneficial if the co-applicant or guarantor meets all other loan eligibility requirements and has a decent CIBIL score. Therefore, before applying, make sure to check the CIBIL scores of your co-applicant/guarantor and if they match the SBI personal loan CIBIL score requirement. This will enable you to receive the loan amount you need with comfortable repayment terms.
Show all income sources to boost repayment ability: Your ability to make payments is directly related to your monthly income. A high salary and fewer monthly expenses typically indicate that you have the resources necessary to pay back the loan. Lenders might therefore accept your application for a personal loan even if you have a low credit or CIBIL score for personal loan . Make sure your money sources are stable and trustworthy, though. In addition to your salary, you might want to display revenue from investments, frequent freelance work, rental properties, and more.
Verify the accuracy of your credit information report: In some cases, such as when a credit account is still open despite timely full payments, the information in the credit report may not be accurate. In such cases, your credit score is negatively impacted. In such cases, you can easily resolve this issue by reporting the discrepancies to the credit rating agency, and they will correct it sometime after evaluating your case, and the same will be reflected on your SBI personal loan CIBIL score.
Check if you have NA or NH: Contact your lender to evaluate your case to check if you have NA or NH on your credit report. These terms denote either a credit term that hasn’t been used in the last 36 months or a credit period that hasn’t existed at all during that time. This indicates that your CIBIL report won’t contain any credit score information. Describe to your possible lender the reasons for your recent credit card inactivity. The interest rate can go up even if the loan is approved.
Take out a small borrowing: If your CIBIL score isn’t high enough, lenders will be less willing to lend you money because of your creditworthiness. In other words, lending money to someone with a low credit score entails greater risk for the lender. You can still get authorized to get a small loan. A top lender might offer you a smaller loan if your low credit score. Furthermore, by taking out a small loan, you have the option to make regular payments and raise your credit score.
File IT returns: Filing tax returns is important since lenders will view them favourably if you have done so for the past three years. Make sure you continue to file your IT returns even if your income decreases in a given fiscal year, as this will serve as evidence for subsequent loan applications.
Alternative methods: You can try turning to an NBFC if you think a mainstream bank would reject your loan application. You can still get a personal loan from NBFCs like Tata Capital even if your CIBIL Score is low. You will have to demonstrate that you earn a consistent income, that you have paid your taxes, and that you can manage the interest rates.
Negotiate: After approaching an NBFC, make an effort to reach an agreement on the loan’s terms, tenure, and EMIs. You can always apply for a personal loan, even if it’s for a smaller sum than you need.
Be wise with your credit habits now that you know how to get an SBI personal loan CIBIL score of 550 or higher. Consistently check your CIBIL score so that you can act quickly to improve it. On both lenders and the official CIBIL website, you can check your credit score.