How to Get a Personal Loan with Low CIBIL Score?


05 Mar 2019 | 3 min read

A personal loan comes as a big help in case of a financial emergency. But not everyone can be eligible for a personal loan as several checks are needed before the bank decides whether or not to grant to a loan. CIBIL Score or Credit Score is among the first things that the lender looks at. So, does it mean that people with Bad CIBIL Score cannot get a personal loan? No. It is possible to get a personal loan with a low CIBIL Score. Let us learn more about what CIBIL score is and how it impacts your eligibility for loans.

What Is CIBIL Score?

TransUnion CIBIL is one of the most popular credit bureaus in India along with Experian and Equifax. These credit bureaus receive credit information from different lenders and assign a three-digit score to every individual. These scores may vary from 300 to 900 depending on the scale and the bureau.

A score below 300 denotes poor credit People with poor scores will find it really difficult to get any type of loan- whether secured or unsecured.
Score of 300-600 means poor to fair If you have a fair score, you may be able to get a secured loan from but you would not be in a position to negotiate a better rate of interest.
A credit score of 600-750 means fair to good score A score like this opens up your options for unsecured loans along with high-ticket secured loans. However, you still may not be able to negotiate better deals on loans.
A score above 750 translates to an excellent credit score If you have an excellent score, you have great chances of getting approved for a loan at competitive rates of interest.

Apply Personal Loan

Better the CIBIL Score, higher will be your chances of getting a personal loan. Before you apply for a personal loan, you should check CIBIL score to make sure that your application does not get rejected. However, even a great credit score does not guarantee loan approval; several other factors come into play.

When you take a loan or credit card from a bank, the lender is required to share the details of your payment frequency, late payment, etc. to the credit bureaus. Based on the information furnished by the lenders, bureaus assign a credit score to you. This score helps other lenders understand whether you are a responsible borrower. On the basis of your CIBIL Score, income and several other factors, banks approve your loan application.

When you register for a free credit score service from any of the bureaus, you not only get the credit score but also a complete report of your credit information. This is known as a credit report and contains detailed information about your credit accounts- credit cards, home loan, car loan, personal loan, etc. It also includes late payments (if any) along with the days past due. You can see your credit utilization ratio based on the credit usage on various accounts. Any hard inquiry on your credit profile is also reflected in your credit report. With a credit report, you can get complete insights about your credit and how you can improve credit score.

Why the CIBIL Score is important for Personal Loan?

Not just personal loan, CIBIL Score is important for any type of loan or credit card. It is the rate of your creditworthiness and hence, it is the first thing that banks look at when you seek a loan from them. It is a part of the pre-screening only which means that the lenders will look at your CIBIL Score but they would not just reject you on the basis of a poor score. A number of other factors are involved in deciding whether you will be approved for a loan or not.

Listed below are a few things you should keep in mind at the time of applying for a personal loan:

  • You should check CIBIL Score before sending the application. If you have a bad score (below 600), it is better to start working on improving it by making regular EMI payments and not missing any of the due dates. It would take a few months for the score to repair but it will definitely increase your chances of approval.
  • Before applying for a personal loan with a particular bank, check whether you meet the eligibility criteria set by them. A credit score is important but there are some other basic requirements that you must fulfill in order to be eligible for the loan. Check if your area comes under the bank’s purview; see if your company is on their list.
  • In case you have an excellent credit score, you have the leverage to shop around for better rates of interest. So, you should not grab the first deal you get. Negotiate with the bank to get a lower rate of interest. Higher the score more will be your bargaining power.

As we have mentioned before, CIBIL Score is among the first few things that the banks consider for pre-screening of a loan applicant. They will check if you meet the basic criteria regarding age, residential status, employment status, etc. along with the credit score. Even if you have a low CIBIL score and everything else checks out, you may still have a chance at getting approved. Personal loan at the best interest rate may not be at your disposal if you have a low credit score. On the other hand, applicants with excellent scores not only have higher chances of approval but they are also in a position to shop around for better rates of interest.

What does bad CIBIL score actually mean?

When it comes to credit, CIBIL score signifies the level of trust that the potential lenders have on you to ensure that you will repay any money that you borrow from them. You may fall anywhere between bad credit and excellent credit. Bad credit translates to a low CIBIL score meaning no lender would be interested in giving out loans to you whereas an excellent credit score makes you lenders’ favourite. Most of the borrowers lie somewhere between these two extremes, with average to good credit scores.

CIBIL Score is a three-digit number ranging from 300 to 900. A score above 600 is considered fair and scores below 600 are considered poor. Bad credit score is a reflection of your past financial failures that still have much impact on your credit profile. It typically means that you have not been able to service your loans properly in the past, have not paid your bills on time or defaulted on a loan or a credit card. So, let us learn more about what causes a bad CIBIL score.

What are the Reasons for Low CIBIL Score?

Following reasons may be attributed to a low CIBIL score:

  • Payment History- When you take a loan or a credit card, you are required to pay the pre-decided amount in full and on time. Your CIBIL score is a reflection of your payment history. So, if you have missed out on payments or defaulted on your EMIs during the credit period, your credit score certainly takes a hit. And if you continue missing the payments multiple times, your scores may seriously come down.
  • Credit Utilization Ratio- It is the ratio of your credit balances to the total available credit limit that has been assigned to you. A higher ratio indicates that you have been using the available credit quite recklessly and makes the potential lenders find you as a credit hungry person. On the other hand, if you maintain a credit utilization ratio of 30 percent or lower, it will put you as a responsible borrower in the eyes of the lender. Lower the utilization ratio better will be your CIBIL score.
  • Credit Mix- If you have a single type of credit account, it may not have as much positive impact on your score as having a diverse mix of credit would make. A good mix is one that has different types of credit accounts say secured as well as unsecured. Having credit cards, personal loans, home loan, car loan, etc. in your credit account and managing all of these responsibly will lead to an excellent credit score.
  • Credit Enquiries- With every hard inquiry initiated on your credit profile, your CIBIL score goes down. This is the reason why financial experts always suggest not applying for too many loans or credit cards at the same time. There should be a gap of at least six months between two applications so that your credit score has enough time to repair.

Connection of Personal Loan and CIBIL Score

There is a direct connection between a personal loan and CIBIL Score. Higher the CIBIL Score better will be your chances of personal loan approval. Generally, banks ask for a score of 750 and above for personal loans. Since a personal loan is usually unsecured, banks are at a higher risk. In case the borrower is not able to repay the loan, the bank does not have anything to recover the amount except file a suit against the borrower. This is the reason why the CIBIL score holds so much importance in terms of personal loans.

Before you apply for a personal loan, you must improve your CIBIL score. You can take the following steps to repair a broken credit score or to improve your score.

  • Get regular with EMI payments on credit scores.
  • Lower your credit utilization ratio by making more payments and reducing the usage on your credit cards.
  • Always make EMI payments on or before the due date; do not miss a single payment.
  • Always check your credit report and dispute the discrepancies, if any.
  • If possible, increase the credit limit on your credit card.

How to Get Personal Loan for Low CIBIL Scores?

If you have low CIBIL Score and wish to get a personal loan, you can apply for it through our website. Here, you will find various personal loan options from banks that are willing to extend loans to people with below-average credit. The application process is the same as the normal procedure. Follow the steps given below:

  • Visit our website
  • Go to the ‘Loans’ section and choose ‘personal loans’.
  • Select your type of employment- salaried or self-employed.
  • Enter your company details and the total work experience.
  • Enter your monthly income.
  • Mention the amount of EMI that you are paying currently.
  • Enter your date of birth as mentioned in your PAN Card.
  • Select your city and enter the loan amount that you seek.
  • Now enter your email ID and mobile number.

Once you fill these details, you will get a call from one of our executives who will guide you through the process. You can ask any questions related to your CIBIL score to know the chances of approval for a particular loan. To be sure about the loan amount, you can use our personal loan EMI calculator and take a smart decision after comparing several values at different rates of interest.

Alternately, you can visit the bank’s website wherein you can enter your details and their executive will call you and guide you through the process. However, here you will not be able to compare the personal loan offers from different banks.


1. Can I face rejection even if my credit score is above 600?

Yes. Your personal loan application may get rejected even if you have a credit score above 600. This is because credit score is not the only thing that the lenders look at when they scrutinize your application. Your monthly income and the current EMIs that you are paying will help the lenders decide whether you are in a position to take up more debt. So, if the bank finds that you have too much debt already, then you may be denied for the personal loan. Other factors that lead to personal loan rejection include an incomplete application form, inadequate documents, unstable employment, low income, etc.

2. How long do I have to wait if I have to re-apply for a personal loan with Afinoz?

If you get rejected for a personal loan, you can send a new application to another bank immediately. However, an important point to note here is that when you apply for a loan, a hard inquiry is initiated on your account and upon rejection, your credit score takes a hard hit and it drops by at least 6-7 points. This drop is enough to bring you down to a fair scale from an excellent one. If you wait for about 6 months between two loan applications, you would get enough time for the credit score to recover to improve your chances of getting approved. Ask the bank about the reason for such rejection and work on improving the aspect.

3. What are the documents to be submitted for personals loan for low credit scores?

At the time of personal loan application, you will have to submit KYC documents such as proof of identity and proof of income. Along with this, you will have to submit proof of your income which may include the last three months’ salary slips, last six months’ bank statement, Form 16, ITR, etc. The following documents are usually accepted for KYC verification-

  • Proof of Identity- PAN Card, Passport, Voter’s ID Card, Driving License, Aadhaar Card or any other government-approved photo ID Card.
  • Proof of Address- Driving License, Voter’s ID Card, Passport, Arms License, Utility Bills (not more than 3 months old) or any other government approved a document with your address mentioned on it.

People with poor credit scores may have to provide some extra documents such as proof of stable employment. However, this is in extreme cases; otherwise, the above documents usually suffice.

4. What is the minimum age to apply for a personal loan with a bad credit score?

Whether you have a bad credit score or an excellent score, the age criteria will be the same as set by the lender. For example, if you seek a personal loan from HDFC Bank, you must fall in the age group of 21-60 years. Whether you have a credit score of 600 or 800, in both the scenarios, you will have to meet the age criteria. Most of the banks extend loans only to people of legal age provided that they have a source of regular income. Different age criteria may be set by different banks so you must check the same before applying.

5. How long will it take for my loan amount to reach my bank account?

It usually takes about 7 to 10 days for a personal loan application to get approved and the amount to get transferred into your bank account. Nowadays, a few banks have launched a quick loan approval mechanism under which your loan application is checked and approved within a day and the amount gets transferred within the next 3 days. Mostly, the personal loan is taken to meet a financial emergency so it would not make sense for the process to take too long. This is why banks process personal loan applications much quicker. Moreover, being an unsecured loan, no extra collateral is required thus making the application process simpler.

6. How can I apply for a personal loan without a CIBIL score?

You can apply for a personal loan even if you do not have a CIBIL Score. The application process would be the same for people who are new to credit. The only difference is that since these applicants do not have a credit score, the bank would find it difficult to assess their creditworthiness. This can lead to a tedious verification process. Also, if you have not started on the credit journey, you may find it difficult to negotiate a better rate of interest on the loan.

7. How to get a personal loan without CIBIL Verification?

Every time you apply for a loan or credit card, you will have to go through the verification process. You cannot skip the verification. Instead, you can take a few steps to improve your chances of approval. Go for a bank with which you already have a relationship. If you have a savings account or fixed deposit with the bank, they would be more willing to extend a loan to you. You can also resort to personal loan alternatives such as loan against property, gold loan, etc. Some banks also give secured personal loans so if you can put something as collateral, you can choose the same.




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