Banks and financial institutions consider the CIBIL score to be one of the important factors in lending loans. A CIBIL score of 550 is on the lower side, and the chances for rejection are high. However, there are lenders with whom you can secure a personal loan with a CIBIL score of 550. If your profile fits the description then this article is for you.
Understanding the CIBIL Score
CIBIL score is a three-digit number that indicates your creditworthiness to banks and financial institutions. For every loan or credit you borrow, the CIBIL records it and your score is updated accordingly. Non-repayment of loan EMIs or credit card bills leads to lower CIBIL score. Hence, getting a personal loan for a CIBIL score of 550 is a difficult task. While conventional banks and NBFCs will refuse to lend money, there are other ways to secure a loan with a CIBIL score of 550.
Personal Loan Options for 550 CIBIL Score
If your CIBIL score is below 600, traditional banks like government banks will not approve your loan application. It is not the end of the road. Nowadays, it is possible to get a personal loan with a CIBIL of 550. Although the terms and conditions of such loans may not be agreeable to borrowers, it is a relief during a financial emergency. Consider the following loan options for a 550 CIBIL score.
Payday Loans
Payday loans are instant loans offered to those who need money urgently. Payday loan providers offer personal loans for a CIBIL score of 550 in India. The biggest advantage of these loans is that they are processed quickly, with less paperwork. All you are required to do is to go through an e-KYC process. The final loan amount will depend on your CIBIL score. However, borrowers have to repay payday loans within a month. It is advised to read the offer documents carefully before committing to payday loans.
BNPL loans
As the term indicates, BNPL (Buy Now Pay Later) loans are a variation of payday loans. BNPL loan providers do not conduct stringent credit checks, hence, this is one of the good options to consider for a personal loan for CIBIL of 550 in India. These loans enable borrowers to utilise credit to shop online, thus eliminating the need to pay with cash upfront. Borrowers can repay through monthly EMIs or completely repay within the next month. The interest rates for BNPL loans are lower than those for Payday loans. However, remember that maximum utilisation of your credit limit or missing BNPL loan repayments can adversely affect your CIBIL score. Amazon Pay Later, Flipkart Pay Later, Flexmoney, Slice,Kreditbee are a few of the major BNPL loan lenders in India.
Secured Loans
Secured loans are loans lent on tangible collateral. All major government banks, NBFCs and private banks in India provide secured loans. To secure a personal loan for CIBIL of 550 is difficult as the policies of these major banks do not allow low CIBIL score borrowers to borrow loans. However, if you can name a co-applicant with a good CIBIL score and possess assets like land, gold or government bonds, there are chances of getting secured loans. This is purely conditional and depends upon the lending banks to consider the application of borrowers with low CIBIL score.
Strategies to Get a Personal Loan With 550 CIBIL Score in India
In order to qualify for a low CIBIL score loan, adopting the following strategies will help.
Maintain a good credit score: Whenever you purchase a credit card or borrow a loan, it is recorded in your CIBIL report and your score is updated. A good credit score is maintained when borrowers make timely EMI and credit card bill repayments.
Check Your CIBIL Score: We cannot stress more on doing this. The notion that checking your own CIBIL score frequently, lowers it is a myth. Your CIBIL report gives you a detailed explanation of any pending payments, thus helping you plan your finances consciously. This exercise ensures that you don’t default on your payments.
Go through your loan provider’s repayment policies: This is applicable to BNPL and Payday loan borrowers. When you are familiar with your provider’s repayment policies, it helps you to make mindful decisions regarding your credit repayments and make thoughtful investments that can help in paying off these loans just in time.
Avoid having multiple credit accounts: Multiple credit accounts indicate a lousy borrowing system to low CIBIL loan lenders. The same applies to multiple loans. If you have multiple ongoing loans, this can affect your CIBIL score.
Provide a stable proof of income: A proof of income indicates to loan providers that you have the financial means to make timely repayments. This will help you to secure personal loans despite a low CIBIL score of 550.
Name a co-applicant with a steady income source: If you are unemployed and are looking to borrow a personal loan, it is better to name a co-applicant who is employed. This will assure lenders that repayment will be done on time.
Conclusion
While personal loan options for 550 CIBIL score are scarce, they exist. Consider the best lenders for low CIBIL score like Payday loan lenders, BNPL, NBFCs (Non Banking Finance Companies) and private banks. In order to realise your financial aspirations, adopt low CIBIL score loan approval strategies listed above. These tips will help in qualifying for loans with 550 CIBIL score. If you don’t have any other financial liabilities, it is better to keep a track of your CIBIL score and maintain a good number by following best practices.