Arjun, a young professional from Bangalore, often forgot to pay his home loan EMIs on time. Given his busy schedule, remembering to pay the EMIs was a problem. So, he did not mind paying the penal interest for such defaults. But he did not realise this was adding bad credit score in his name. He was in a fix years later when he applied for a Personal Loan. His home loan had been paid in full and he had no loan liabilities. Yet, he could not get a Personal Loan easily. The reason? His credit score was low, thanks to his repeated home loan defaults.

So, what is a good CIBIL score? The minimum CIBIL score needed for a Personal Loan lies somewhere around 750. Arjun’s score was 600.

Also Read: How Much CIBIL Score is Required to Get a Personal Loan

Now, Arjun was worried. He needed urgent funds for his mother’s treatment. After a couple of sleepless nights, he found out that he could apply for a Personal Loan even with a low credit score. He just had to follow some steps and then apply for the loan. So, what were these steps?

Here is the list of the steps. He had the option of following either one or more of these steps to get a Personal Loan.

  • Adding a Guarantor

His credibility was poor, as his credit score reflected. To strengthen it, he could add a guarantor in his loan application. A guarantor of good financial standing contributes towards increasing the borrower’s credibility. As your credibility increases, lenders sanction loans quickly.

  • Adding a Co-borrower

If he could not find a guarantor, Arjun could also add a co-borrower for his loan. His wife, sibling(s), mother/father (if earning), or any friend could be a co-borrower. Adding a co-borrower increases the combined income level. Thus, it increases the Personal Loan eligibility. This would make Arjun eligible for a Personal Loan.

  • Securing a Collateral

Personal Loans are unsecured loans. But individuals with a bad credit history can get such a loan if they pledge some collateral. The collateral decreases the lender’s risk. So, it increases the chances of a prospective borrower to get a Personal Loan.

  • Increasing his Income Flow and Showing Proofs

The last resort that Arjun had was to show the lender his increased income inflow. Increased income means better repayment capacity. This cuts down on the default risk. However, the increased income has to be supported by relevant income documents. Only then will lenders grant loans.

Arjun had various financial investments. He chose the third option and pledged his assets as collateral. Thus, he got a Personal Loan despite having a low credit score. He was happy that his mother received the right treatment at the right time. He vowed never to default on his loans again, so that he could maintain his CIBIL Score. Who knew if he might need another Personal Loan in future!

Apply for Personal Loan Check your Loan Eligibility Calculate Your EMI