There are many people whose loan applications get rejected by the lenders due to low credit score or CIBIL score. A loan rejection can break many dreams. People with low credit scores also want to improve their lifestyle, but because their creditworthiness or borrowing power is low, they often feel frustrated. A credit score below 624 is considered a bad credit score, while those above 700 are considered good and those above 750 are considered excellent.
Now, you may wonder why a bank may have rejected your loan application due to low credit score, there are many ways in which you can get a personal loan. Some of them are listed here:
Apply with NBFC: Non-banking financial companies often approve personal loans to people with low credit scores but it comes with a stipulation. They offer it at a higher rate of interest than the nationalized banks. Since NBFCs have high flexibility when it comes to credit scores, they are ready to take risks and extend loans to those in need.
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peer-to-peer websites: These are lending websites often referred to as P2P websites. They offer loans up to Rs 5 lakh for tenures ranging from one year to five years. These websites connect borrowers and lenders to facilitate loan approvals.
Get a Co-Applicant: If your earnings or credit score does not qualify for the loan, it may be helpful to add an earning member of the family as a co-applicant. Since this will reduce the credit risk of the lender, you may be more likely to get the loan.
Small amount: Lenders are often hesitant to offer high value personal loans to people with low credit scores. So, if you opt for a smaller amount, it can be approved with a nominal cheque. Suppose if you take a loan of one lakh and repay it on time, it will also improve your credit score and thus allow you to get a bigger loan.
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secured loan: Secured loans are loans given against collateral. This means that you have to pledge something valuable in return for the loan amount. You can pledge gold, property, financial securities etc. You can also go for a gold loan with a low interest rate.
However, keep in mind that your ability to take a loan is also affected by your repayment history. If you default on EMI/repayment more frequently then it will be difficult for you to get the loan.