Whenever you apply for a personal loan, your credit score is the most important factor that lenders consider while approving your loan application. For every financial institution that offers any type of loan, your credit score is an important marker that denotes your creditworthiness and financial standing. In other words, it is a metric that shows your lender how likely you are to repay the loan EMIs on time. This is why your credit score is perhaps the first thing your credit issuer checks to evaluate your profile. But does this mean that people with a low credit score cannot avail of personal loans? Of course not. There are still some measures you can take to increase your chances of getting a low credit personal loan. Here are four of them. Read on!
1. Show Repayment Capability
If there’s one thing that any personal lender looks for in an applicant, it’s strong repayment capacity and financial responsibility. Regardless of your low credit score, if you feel that you can pay off your loan EMIs on time without any issues, communicate the same to your lender. Show him that you have a stable job with a continuous income, and it will increase the odds of your loan being approved. If you’ve received a salary hike or a cash windfall recently (in the form of a bonus), tell your lender about it. All of this points to increased repayment ability, and he may approve your loan.
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2. Borrow a Lower Amount
As you know, a smaller amount is always easier to repay. Asking a higher amount as a low credit personal loan from your lender is anyway a risky proposition, as he's worried about your repayment capacity. If you apply for a higher amount knowing that your credit score is low, it gives out an impression that you will default on your loan. That's why it's always advised to start small. If you start with a smaller low credit personal loan and repay it on time, it will encourage your lender to give you a bigger loan the next time.
3. Get a Guarantor for Your Loan
If you need a personal loan with a low credit score, but the amount is high, getting a guarantor is a good idea. A guarantor is an individual who promises to pay off your debt if you can't clear it on time. He puts forth a guarantee of repaying the loan in writing, which increases the possibility of your lender approving your loan application. Another good thing is that almost anyone can be a guarantor, be it a parent, sibling, spouse, or even a friend. Just ensure that they have a good credit score and steady income.
4. Rectify Errors in Your Credit Report
Do you have a habit of checking your credit report regularly for errors? There may be mistakes therein which you may be unaware of. For example, if you've cleared the last EMI on a low CIBIL loan, it may still not reflect on your latest credit report. Instances like these bring down your credit report for no reason. This is why we recommend checking your credit report for errors. You can correct them and boost your credit score. Doing so will increase your eligibility for a low credit personal loan.
Implementing the tips mentioned earlier will help you avail of a low credit personal loan quickly. If you're looking to get a low credit personal loan, KreditBee is an option you can consider. Our entire loan application process is quick and completely online on the KreditBee mobile app, from profile creation to disbursal. You just need to download the app from Google Play, complete your profile, and relax. If you wish to learn more about our small personal loans, please write to us at [email protected].