How to Improve and Increase your CIBIL Score to become eligible for a Personal Loan?
A Personal Loan is useful to fund a range of financial needs, such as medical emergency, marriage, education, travel, purchase of a car and so on. To improve your chances of getting a Personal Loan in the near or long-term future with reasonable interest rates, you must have an excellent CIBIL score.
CIBIL prepares a credit score that acts as the first step to check the eligibility of a person for a Personal Loan. The score is based on a range from 300 to 900, where 300 is extremely poor, and 900 is the best score one can have. A good CIBIL credit score is considered to be 750 or higher. Banks usually do not sanction a Personal Loan for low CIBIL score, and if they do, then they may charge a very high rate of interest.
The CIBIL score is an indicator of a person’s creditworthiness, or their ability to repay loans.
Have you ever wondered how to get a Personal Loan with a low CIBIL score?
A Personal Loan for low CIBIL score might be tough in terms of approvals and sanctions. However, there are options which can be explored
- A Collateral loan: collateral such as fixed deposits, mutual funds, the property can be attached to your Personal Loan.
- Employer and Lender tie-ups: reputed organisations generally have tie-ups with a lender as part of corporate relations. As a result, special facilities could be provided, one of which could be a Personal Loan with a low CIBIL score
- A Joint Loan with a family member: if they have a good CIBIL score you could take a joint loan with them a family member.
- A guarantor: Among your family and friends if there is a guarantor with a good CIBIL score. Then there is a high possibility that your Personal Loan gets sanctions based on your guarantor’s CIBIL score.
- Other Sources: apart from banks that might lend you, Non-Banking finance compares also offer Personal Loans. However, these would be at a much higher rate of interest.
However, you should be eligible for a Personal Loan in your own right. This can be ensured by increase CIBIL score.
Let’s look at How to increase CIBIL score for a Personal Loan -
Follow our guide to increase CIBIL score that will increase the likelihood of being eligible for a Personal Loan with a low CIBIL score –
- Check your credit score
At times a Personal Loan for low CIBIL score could be sanctioned by CIBIL on wrong terms. Scrutinise the report, looking for any errors such as a closed loan marked as pending or a loan you never applied for. File a dispute with CIBIL to rectify the errors. You will have to keep a check on other errors and suspicious activities continuously. Resolve these errors, and you will see an immediate rise in your score.
HDFC Bank customers can check their CIBIL score via NetBanking. If you are not an HDFC Bank customer, you could request your credit report directly from CIBIL. You may need to make a payment to access the report.
- Use credit wisely
It is a good idea to use your Credit Card regularly, as under-utilisation can lead to a decreased credit limit. This can have a negative impact on your credit score. Try limiting your credit utilisation every month. This will have a positive impact on your CIBIL score. Maintaining your monthly balances low will indicate a healthy CIBIL score.
- Pay your dues
Another important aspect of how to increase CIBIL score is to be prompt in repaying your credit card bills and EMIs. This feature is of great importance to increase your CIBIL score. Timely payment of bills can keep your creditworthiness intact.
- Keep it balanced
As mentioned above in the segment of how to get a Personal Loan with low CIBIL score, it states that there is a possibility with the assistance of a collateralised loan. However, to increase your CIBIL score, you need to have a healthy mix of unsecured loans such as Credit Cards, Personal Loans and secured loans as Home Loan, Car Loan etc. It is imperative to maintain a perfect balance as taking any of the loans in excess can have a grave impact on your credit score.
To get a good Personal Loan, you need to have a good CIBIL score. The above are the few features to consider how to increase the CIBIL score.
If you are planning to get an HDFC Bank Personal Loan, you can take advantage of the competitive EMI rates starting at Rs. 2,162 per lac. For HDFC Bank customers, you can get the funds credited to your account within 10 seconds* whereas non – HDFC Bank customers can get the funds credited to their account within 4 hours*.
* Terms & conditions apply. Personal Loan disbursal at the sole discretion of HDFC Bank Ltd. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.