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Why CIBIL Score is important and how can you get a loan with Low CIBIL Score?

CIBIL Credit Score

A personal loan is a collateral-free loan that you can acquire for any personal financial purpose. Personal loan lenders offer personal loans after checking and evaluating the CIBIL score.

To understand how this works, it is important to first know about the CIBIL score and its relation to the personal loan.

Relationship between Personal Loan and CIBIL Score

Credit Information Bureau, India Limited (CIBIL) provides a credit score that acts as the first criterion to check applicant loan repayment eligibility.

This credit score is a three-digit numeric that shows the entire credit history. As it is based on the information provided by the banks and other financial organizations every month.

The credit score ranges from 300 to 900. A score lower than 750 is considered as a low or bad CIBIL score.

Banks generally do not sanction the Personal loans with low CIBIL score to the people , or even if they do, they may offer it at a very high-interest rate.

So, whenever one applies for a loan, the CIBIL score is the first thing or can say among the priority of the lender.

CIBIL score majorly depends upon the repayments of the previous loans or credits and credit card debts.

In case the repayments are done on time, it will translate into a good CIBIL score. On the other side, the untimely payment of dues and EMIs will harm the CIBIL score.


Improve your CIBIL Score

A personal loan is usually taken to deal with personal emergencies. So, to sanction a personal loan, a lender thoroughly checks the applicant to know whether he/she is capable enough to repay the loan timely.

Since there is no collateral or security deposited against the loan amount with the lender, it becomes extremely important for them to check the past repayment history of the applicant in terms of the credit repayment via the CIBIL score.

CIBIL score is one of the top priorities of the lender while the loan sanctioning process. So, it becomes very important to have a good CIBIL Score. Here are the few ways through which you can improve the CIBIL Score:

  • Don't Apply for Too Much Credit – Availing a new credit card can affect the overall credit limit, but the act of applying for multiple credits make a hard inquiry on the credit report. And too many hard inquiries will have adverse accept on the credit score.
  • Maintain the Credit Limit- The credit utilization ratio has a major impact on the credit score. The more you will balance the credit usage as per the limit, the good it is for the credit score.
  • Timely Bill Payments- Timely repayment of the debts can have a significant effect on the credit score. Delays in the EMI payments not only make an individual liable for a penalty but also leads to the fall on the credit score.
  • Choose for a Longer Loan Tenure – Whenever one borrows a loan, he/she should try to go for a longer loan repayment tenure. This will ensure that the EMI is low, and so, the timely payments will be feasible.

Reasons for Low CIBIL Score

Here are some of the reasons behind a low CIBIL score:

  • The multiple loans cause a low CIBIL Score.
  • High utilization of the credit limits.
  • Too many loan application rejection/credit card requests.
  • A higher percentage of unsecured loans.
  • Having no credit history at all.
  • Settling the credit cards with the bank by paying a lower amount than the dues.
  • Defaults or penalty on the payment of loan EMIs or Credit card dues.

Ways to get Personal Laon at Low CIBIL Score

You may have heard that you cannot get a personal loan with a low CIBIL score, this is not the complete truth.

However, a low CIBIL score might lower your chances of getting a personal loan sanctioned but still, other options could be used to avail a personal loan with a low CIBIL score.

Here are the measures that you should implement to get a personal loan despite being a low CIBIL scorer:

  • Apply for a lower personal loan amount Asking for a high amount with a low credit score only shows more risk to the lender. From a lender’s point of view, these are indicators that you may default on the loan repayment. If you apply for a low amount of a personal loan, a lender may feel more comfortable sanctioning the loan to you, as a lower amount is easier to repay.
  • Prove that your income can support EMI payments If you can talk to the lender that you have a stable job and steady income, they are more likely to consider you for a personal loan despite a poor CIBIL score. However, you may have to pay a higher interest rate when you prove your eligibility in this manner.
  • Correct mistakes in the credit report The CIBIL report may contain some errors. This is usually when the latest information has not been updated against the record. Mistakes like these can lower down the credit score for no fault of yours. So, it is important to check the CIBIL report for free regularly and correct it in case of any error. This will boost the credit score and make you a better candidate for the loan.
  • Apply with a co-applicant or secure a guarantor In case of a low CIBIL score, you can apply for a personal loanby involving a co-applicant or a guarantor. Of course, you will need to ask the other applicant beforehand, as they will have to complete the KYC formalities and provide signatures too. The key benefit here is that if the personal loan lender finds the co-applicant or guarantor to have a stable income and a better credit score, they are certainly more likely to grant you a personal loan.

Personal Loan Interest Rate

Another important part comes in whenever there is the talk of a personal loan and i.e. rate of interest. Generally, the interest rate on the personal loan varies based on case to case basis.

Interest rate plays a major role in the monthly EMI which a borrower is bound to pay regarding repaying the loan amount. Many factors play a significant role in the offered personal loan interest rate. Some of them are given below:

  • Organization: When one works for a reputed employer, the lenders get the impression that he/she has a stable job and will have a constant income. This increases the chances of repaying the loan on time. Hence, if one works with the reputed organization, he/she may get offers of personal loans on the low-interest rate.
  • Income: Generally, when the income increases the chances of timely repayment of the loan also increases. So, you can get a personal loan offer at low-interest rates with higher incomes.
  • Credit Score: This is 3 digits numeric that reflects the summary of one financial behavior. It varies from 300 to 850. A credit score of 750 and above falls under the good brackets of a score. If your credit score is more than 750, you may get a personal loan on a low rate of interest.

Documents Required

The required list documents may vary based on many things. Below is the generic list of documents required for acquiring the Personal loan:

  1. Duly filled loan application form
  2. Recent passport-sized photograph.

Identity proof (any of the following)

  • PAN Card
  • Aadhaar Card
  • Passport Copy
  • Driving License
  • Voter ID Card

Address Proof (any of the following)

  • Passport Copy
  • Rental Agreement
  • Driving License
  • Bank Statement or Passbook
  • Electricity Bill
  • Ration Card
  • Telephone Bill

Age Proof (any of the following)

  • Passport Copy
  • PAN Card
  • Any other certificate obtained from a statutory authority


  • Last 3 Salary Slips or Last 6 months Bank Statements/ Passbook
  • Form 16
  • Last 3 years IT Returns
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