Getting a personal loan with a poor CIBIL score can certainly be an uphill task but it is still not impossible. There’s a number of options one can avail to get the loan they want.
One can rely on non-banking financial corporation, peer to peer lending platform and guarantor to get the loan. Alternatively, one can use collateral to get the loan sanctioned.
These are some of the options you can explore:
Loan on collateral: If you have fixed assets such as a real estate, you may be able to get a secured loan where the lender uses the asset as collateral. With collateral involved, lenders are usually more willing to overlook a poor credit score.
Loan against FD: If you have fixed deposits in a bank, you can avail a loan against them. Since the fixed deposit serves as collateral, the bank may be willing to provide a loan even with a poor credit score.
Peer-to-Peer (P2P) lending: P2P lending platforms connect borrowers directly with individual lenders. They are usually more flexible in their criteria as compared to traditional financial institutions.
ALSO READ: How to improve CIBIL score? Here are 8 effective ways
Guarantor: Having a guarantor with a good credit score raises your chances of getting approved for a personal loan. The co-signer agrees to repay the loan if you default, providing the lender with additional security.
NBFCs: Some NBFCs are usually more willing to lend to individuals with poor credit scores, although they may charge higher interest rates to compensate for the risk.
It’s vital to consider the terms and conditions of any loan offer, especially when dealing with alternative lenders who may charge higher interest rates or impose stricter repayment terms.
Frequently Asked Questions (FAQs)
What is the long-term solution of poor credit score?
While it may not be an immediate solution, working to improve your credit score over a period of time can raise your chances of procuring loans with better terms in the time to come. For this to happen, one has to start making timely payments, reducing outstanding debt, and avoiding new credit inquiries.
Is it easier to procure loan on P2P lending platform?
Peer to peer lending platforms enable borrowers to raise loans easily since these platforms cater to the borrowers who don’t find it easy to raise loan from traditional financial institution.
How can you raise loan by using your fixed deposit?
If you have fixed deposits in a bank, you can use the same to avail a loan against them. Since the fixed deposit serves as collateral, the bank may be willing to extend a loan regardless of credit score.
Does having a collateral help borrowers procure loan?
Yes, it does. Even if someone’s credit score is poor, having an asset as collateral helps to get the loan sanctioned.
Can NFBCs hand out loan to borrowers with poor credit score?
Some NBFCs are willing to lend to individuals with poor credit scores, albeit at a higher rate of interest.
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Published: 07 Mar 2024, 01:45 PM IST