Unexpected financial crises come to everyone’s door, and at times, they happen beyond any planned estimates. In such times, arranging funds on an urgent basis becomes a priority. But desperate times call for desperate measures, and you might feel that overcoming low CIBIL scores can work against you as far as seeking loan facilities from the bank is concerned.
Higher chances of rejection due to a poor credit score will only serve to make matters worse in your case. In bad times, do not lose hope! There are some ways to arrange the money even with low CIBIL scores! This article will talk about practical options to obtain loans in these difficult periods: five of them.
Why Your CIBIL Score Should Matter
Your CIBIL score reflects your finances and repayment habits. Hence it becomes a major determining factor in the loan application process and the subsequent interest rate you would be charged. With a high CIBIL score (750 and above), the chances of loan approval increase, alongside lower interest rates. A CIBIL score below this threshold can set lenders on guard against your application.
With a bad CIBIL score, bear in mind that you’ll have to gradually fix it by sticking to bills and EMIs on time. But if you want some funds right now, here are five of the best ways in which you can secure a loan without growing concerned about your credit score.
Joint Loan or Guarantor
If your income is stable but CIBIL score is low, apply for a joint loan with a co-applicant or add a guarantor to the application. That will work fine if the co-applicant or the guarantor has a strong credit score. Lenders will weigh their creditworthiness as well and thus boost your chances of approval.
Pro Tip: If the co-applicant is a woman, under certain schemes, lower interest rates may apply.
Gold Loan
Gold is not just a metal; it can be life-saving at times. If the CIBIL score is a hindrance, one can easily avail oneself of gold loans. Simply pledge your gold jewelry or gold coins for getting a loan up to 75 percent of its market value.
The highlight here is that gold loans are disbursed with minimal documentation, with lenders paying little attention to your credit score. That makes it one of the easiest ways of obtaining quick funds.
Salary Advance Loan
Most of the companies are giving their employees a salary advance loan now, enabling them to borrow salary on a maximum of three times their monthly salary. The popularity of this mode is due to its simplicity and quick processing.
With fewer formalities involved, salary advances are less linked to the credit score. You could hence settle it through easy EMIs, thus serving as a convenient solution for your short-term financial needs.
A Career Defeat, A CIBIL Score Wipes It Out
Lower CIBIL scores often mean that banks reject such applicants. If this is the case, then maybe the applicant should consider taking loans from nonbanking financial institutions (NBFCs), which are liberal in their lending policies and may issue loans, even with a low credit score.
But remember, NBFCs may charge you higher interest rates as compared to banks and thus compare and select an option with reasonable terms.
Loan Against Deposit Schemes
If you have invested in Fixed Deposits (FDs), LIC policies, or the Public Provident Fund (PPF), this can be used as collateral. Therefore, you can access funds without disturbing your investments.
For instance, if your PPF account has completed one year, a loan against it can be applied. The amount will depend on the value of your deposits, and the repayment will be in fixed tenures with compliance on your part to repay borrowed funds and the interest on time, thus ensuring that this is an attractive option.
Last Words
Weak CIBIL records should not and cannot deny one financial options. Explore the above: joint loans, gold loans, salary advances, loans from NBFCs, and loans against deposits with a potentially bad credit history to access your needed funds.