We, as individuals, have a general tendency to plan for almost everything. Education, marriage, holidays, work and our future are what we plan for. Some of us plan to study further in a renowned university, while some plan to get married at a certain age. Holidays and vacations are something we all want and the most common thing we want in life is a secured future.

While planning is easy, the actual hard part is saving up for those plans. Now, if you have any kind of savings or financial nest somewhere, you are set to carry out your plans. However, what if you come across a financial roadblock on your way to make your dreams come true? You would not and should not give up on your dreams. How about a little help instead?

Help comes to you in the form of personal loans. Be it for education, marriage or travel- a personal loan is an unsecured loan that you can avail in time of your financial crunch. While you would not need to keep any security or collateral, there are few things you will need. One of them is a good CIBIL score.

CIBIL Score… What is it?

Before you open your web browser and try to understand what exactly a CIBIL score is, here is a gist of it. This is your credit information report and the three digit number defines your credit history. It is as simple as that. Credit score ranges from 300 to 900 and better the credit history, higher the score.

Your CIBIL score defines how good you have been with your payments and credit exposure. While calculating your CIBIL score, your credit card utilisation, repayment of credit card bills, number of loans, repayment of those loans are taken into consideration. Once you apply and hand over the information to the agency, they calculate your CIBIL score and formulate a credit report which explains how much your creditworthiness is. This score is what you submit while you apply for a personal loan.

If you have never defaulted on payments and have good credit exposure, chances are you can get a score of 750 or above. Your high personal loan CIBIL score can not only help you avail a personal loan but also give you better interest rates and fast disbursal of the personal loan.

A low blow

Applying for a CIBIL score is like tossing a coin. Either you get a high score or a low score. If your score is high, you can rejoice as you know your chances of getting your personal loan approved is high with better interest rates. However, what if you are in for a rude awakening when you find out that you have a low CIBIL score? Well, before you lose hope let’s consider a few factors that got you the low score in the first place:

  1. Your application: You know the saying “try, try till you succeed…” In this context, the multiple loan applications that you have been sending out to banks and financial institutions; be it for a personal loan, a secured loan or credit card can get you a low CIBIL Score.
  2. A high number of unsecured loans: Too much of a good thing is, sometimes, bad enough. If you have too many loans against your name, this would be another factor that can lower your CIBIL score.
  3. Delaying and defaulting payments: Any missed payment or part-payment, be it for your credit card or your loan EMI, will give you a negative mark on your CIBIL score. There is a reason why your EMI structure is explained while availing a personal loan. This is so that you know how much your monthly outflow would be against your loan and you plan your finances accordingly.
  4. Someone else defaulting on payments: Yes, you read it right. If you are a guarantor for someone else and if that person has delayed or defaulted on their payments, it will affect your CIBIL score as well

Low Score doesn’t mean any personal loan

Just because a few things did not work in your favour does not mean you feel hopeless. If you are applying for a personal loan and your personal loan CIBIL score is low, you shouldn’t lose heart. There are a few things you can still do that can work in your favour while applying for a personal loan.

  1. More than one source: Believe it or not, peer-to-peer lending is one way you can avail a personal loan even with a low CIBIL score. There are many P2P platforms that come together and ‘pool’ in resources so that individuals can avail a personal loan. They look at your income, tax history, assets etc. before deciding on approving on the personal loan.
  2. Alternative means: If you feel that a mainstream bank would reject your loan application, how about going to an NBFC. NBFC’s like Tata Capital will let you avail a personal loan even if you have a low CIBIL Score. You will need to prove that you have a steady income, have paid your taxes and are capable of handling the interest rates as well.
  3. Negotiate: Once you approach an NBFC, try to negotiate on the loan amount, tenure and EMIs as well as interest rates. While you may not get the amount you need, you can always avail a personal loan of a lesser amount.

There are means and ways to everything. All you need to do is work around it. If you have a low CIBIL score and are applying for a personal loan, speak to NBFC like Tata Capital and you will find a way out.