How to Get a Loan if you are on CIBIL’s Defaulter List?
It is quite challenging to get a loan if you are a defaulter or have unpaid dues. Leading financial institutions can decline your application with a low or bad credit score. The loan rejection can be stressful. And, it is essential to beat the stress. Some lenders offer loans to individuals with a bad credit score also. We will help you take some financially prudent steps.
How to get a personal loan with bad or low CIBIL score?
CIBIL score is one of the most important factors considered by lenders to offer a personal loan, home loan, business loan, and car loan. Lenders use your credit score to determine your eligibility for a personal loan. An applicant with a bad credit score is considered as an irresponsible and risky borrower. When you default on a loan, your profile gets registered in the CIBIL defaulters list.
In this situation, you may not be able to access credit from mainstream lenders for years because banks will consider you as a risky borrower. You need a good credit score to get a personal loan, but you cannot improve your credit score unless you get a personal loan – it is a catch-22 situation. So how can you get a personal loan if you are a loan defaulter?
While some leading lenders may decline your application for a personal loan if you are on a defaulter list, your options are not closed yet. Here are some options for CIBIL’s defaulters to get a personal loan.
1. Secured loan
You can apply for a secured personal loan or a loan against collateral. When you apply for the loan, you can offer an asset like gold, land, or fixed deposit with your bank. Lender will be ready to provide you a loan as there is less risk involved. If you default on a loan, it can seize the collateral you have pledged.
2. Apply with a guarantor
If you are not able to get a loan due to poor credit score, you can add a guarantor/co-applicant with a good to excellent credit score. In this case, the guarantor’s credit score will also be considered for loan approval. However, if you default on this loan too, the lender will approach the guarantor to recover the outstanding balance.
3. Try with your current bank
You should speak to your current banker where you have your current or savings account. You can talk to the banker freely without hiding any details about default on a loan or a loan application rejection. If you share a friendly relationship with the bank, the bank could offer you a reasonable deal.
4. Employer’s tie-ups with the lender
Generally, leading companies have corporate tie-ups with banks to provide loans and other financial facilities to their employees. So, you can check with your company if it has tie-ups with any bank and apply for a personal loan with the bank.
5. Online lenders
With the advent of information technology in the financial industry, especially in the banking sector, searching for a loan online has become very easy. Some NBFCs that are lenient with the credit score. However, they may charge a higher interest rate and provide lower loan amount and tenure than traditional lenders.
For example, Vintage Finance, an RBI registered firm and a Non-Banking Finance Company (NBFC), offers a personal loan for CIBIL defaulters in Delhi. There are other lenders that offer a smaller loan amount for a shorter term.
You can apply through Afinoz instant personal loan app. The following are the benefits of the Afinoz app:
- Personal loan is possible even with no credit history
- Simple and complete end to end the digitalized loan application process
- There are additional benefits like cashback upto Rs 5000 on disbursal
- There will be absolute security of your financial data.
- You get real-time updates about different financial products.
- You can enjoy access to all your records anytime, anywhere.
6. Try to close the loan you have defaulted on
If you have defaulted on an old loan or a credit card, it is reflected on your credit report. It will take a toll on your credit score and creditworthiness. It is advisable to immediately close the loan and make sure that your credit report has a ‘closed’ status not ‘settled’ because settlement can affect your credit report negatively. When you settle a loan, it shows you have not paid the original amount you owed to a lender, and the lender is suffering the loss. Hence, you should close old loans instead and get a closure certificate from the lender.
However, it is not easy to get a loan if you are in a CIBIL defaulter list, but you can pave the way with due diligence.
Following are the reasons for a low CIBIl Score
- Poor payment history
- High credit utilization
- Multiple credit inquiries
- Inaccurate report on CIBIL
- Single type of bad credit
Read here how to improve your credit score