A Poor CIBIL Score is not dead-end for your credit needs

Updated on December 28, 20184 mins read

Updated: January, 2018 – You recently applied for a loan and got turned down. On enquiring, you were informed it was because you had a poor CIBIL Score. You don’t need to despair. This article aims to empower you. We assist you with some Corrective Action Points and also some Sources of Funds you can access.

CIBIL has over 500 members. These member banks will have access to your poor Credit Report and Credit Score. Most of the mainstream banks shall stay away from lending to you because of your low credit score or the lack of it.

Here are some immediate corrective action points for you:

1. You should obtain and check your Credit Information Report for errors. It’s possible that your loan information is not updated or it’s a case of identity theft (yes, it’s possible). The process of receiving up-to-date information from the banks and updating the records takes around 2 months.

2. You can also work towards improving your credit score through simple measures focussing your credit usage and repayment patterns. Once you get a score of over 750 (as claimed by CIBIL) you improve your chances considerably for getting a loan sanction from any private or nationalized bank.

If you don’t have a Credit Score (i.e. your Credit Report says NA/ NH) some banks may stay away from lending funds to you since you don’t have a credit history which could make lending to you risky. You could start by applying for a credit card and repay the dues on time to build your Credit Score.

The above measures shall take time to take effect. If you have a poor CIBIL Score or you don’t have one, you can tap into the the following sources for your immediate need of funds:

1. Collateral Loans:

It’s difficult to get a personal loan without a CIBIL credit score. However, you could try and get a secured loan without a CIBIL score. Even if you have a bad credit history, the assets that you own provide sufficient security for the bank. You can get a collateral loan against Gold, Insurance Policy, FD or a PPF.

2. Loan from Co-operative/ smaller banks:

Of the 500 CIBIL members, 200 are co-operative banks who have access to your Credit Score. However, you could approach a small co-operative bank which may not be a member yet. Smaller banks provide loans of smaller amounts and lend at higher rates of interest. But the good news is that they are more likely to lend without checking your credit score.

3. Approach your company

Many companies have a loan policy for its employees. You could approach your HR Manager. If you have served a few years with your company, there is a good chance you can get access to some funds through them.

4. Leverage your steady income for a personal loan:

You have a steady and growing income and have the monthly income statements to prove it. You should approach the bank where you have your salary account and try and get a personal loan from them. Because of the long relationship you have with them, they could help you in your hour of need.

5. Reach out to your Family and friends:

Your immediate family and close friends could help you out of a sticky financial situation. They can assist you in the following ways:

  • Joint loan:

Check the Credit Score of your spouse/ family members/friends. You could ask a person with a better credit score to jointly apply for a loan (be a co-signor). This increases the chances of your loan being sanctioned.

  • Guarantor:

You could request a family member or friend to who has a better CBIL credit score to stand a Guarantor for the loan. This would enhance your chances of loan approval.

  • Direct Loan:

You could approach you friends and family for funds if you are in dire need of money. They may be ready to lend the money to you without any interest or at a nominal rate of interest.

A co- applicant/ guarantor will be held equally responsible for any default or delayed payments on your part. When a friend lends to you directly, his liquid funds reduce. Hence any support extended by your friends and family members to you would depend a lot on your reputation and your relationship with them.

6. Approach Private lenders

There are private lenders who could be approached if none of the above options work for you. They could however, ask for steep interest rates and the original title documents of the collateral you intend to provide.

7. Dip into your Emergency Fund

If neither of the above options work-out, you can break some of your FD’s by paying some penalty. You should opt to do so only in real emergency situations.

Everyone faces financial hiccups. But you can still access credit while you work at building your Credit Score. Recently, banks have launched interest rate slabs that offer lower rates to higher CIBIL score. The benefits are significant considering 20 – 30 years of loan repayment.

 Cheers to a healthy, financially-stable and comfortable life!

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  1. dhamini
    Jan 10 2018 at 5:41 pm

    Hi, My salary is 24K per month and Civil score is 795. I have applied for loan in a bank, they told me it will get approved for sure. But my verification call is pending and they keep saying that I will be getting the verification call sooner, its been 3 days. What does it mean? Will I be getting it or not?

    • Suma Ganesh
      Suma Ganesh
      Jan 22 2018 at 11:16 am

      Hi Dhamini,
      Thank you for writing in to us

      Your CIBIL score is good.
      There may be some other issue or a simple backlog at the bank’s end.
      Please visit a branch and personally find out for speedy action.

  2. Shivani
    Sep 07 2017 at 3:33 pm

    we had taken home loan of 40 lacs. My husband is applicant & I am co-applicant. Both inhand salary is 100000/-. My inhand salary is 45000/-pm
    EMI per month is 48000/-. Bank has paid 95% amount to builder as flat is in finishing stage.since long 4 months we have separated socially & next 6 month will be separated legaly. since last three month my husband is not paying EMI & not picking the phone of bank. bank called me for payment. I am not able to pay EMI alone. My husband is not talking with me & blocked my contact no.
    Please advice, what shall I do to maintain my cibil score.

    • Suma Ganesh
      Suma Ganesh
      Nov 02 2017 at 10:25 am

      Hi Shivani,
      Firstly, please contact a lawyer to cover your financial interests formally. The bank does not identify the separation unless it is in written form and registered. In the meanwhile, if you can, please visit the bank and speak to a manager to understand your options. You could increase your tenure and reduce your EMI.
      However, you may want to hold off on paying out money till it is clear how the property ownership will be divided after separation. Good luck!