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Personal Loan for CIBIL defaulters

CIBIL stands for Credit Information Bureau Limited. It is a database that holds the complete data of the borrower to the bank. The phenomenon completes its circle when a borrow applies for a bank loan, the bank first checks out his/her credit history by getting a Credit Information report which is generated by CIBIL. After going through the report, the bank then decides whether to grant loan to the certain borrower or not. CIBIL in a way helps banks contain bad loans.

Why CIBIL score is important for personal loan

Lenders measure your ability to repay a loan by checking your credit score. It summarises your credit history, the amount of credit you have taken, how you have repaid it, and other factors. All this helps a lender determine if granting you a personal loan is a risky proposition or not, since a personal loan is an unsecured loan and the lender has no other assets to fall back on. While you may have heard that you cannot get a personal loan with a bad CIBIL score, this isn’t entirely true. You can still get a personal loan despite a poor CIBIL score. Here are the measures that you should implement to do so.

Ways to check CIBIL defaulters

You can avail a Credit Information Report from CIBIL and verify whether your name figures on the CIBIL defaulters list. After an initial request to the bank, you get your credit information report while the bank furthers the request to CIBIL. Once this is done, you will be sent a code containing a 9-digit control number. Now, you need to send a demand draft worth INR 142 to CIBIL along with your control number that you received from the respective bank. During the complete procedure, you will be gathering documents that need to be processed. The required documents are:

  • CIBIL Information Report Request Form.
  • PAN/Passport/Voter's ID.
  • Bank Statement/Electricity Bill/Telephone Bill. Kindly remember that CIBIL’s responsibility is limited to making of the CIR report. This is to update the bank on the borrower’s complete credit history. Whether you get a loan or not, is decided by the banks.

How to get personal loan in India if you are a CIBIL defaulter?

Here, we’ll tell you how your loan application will be approved, while you still have a bad CIBIL score. Follow these tips that may help you get a personal loan irrespective of your CIBIL score.

  • Good present salary: If you have a good income presently, you are bound to have improved repayment capacity. This should go a long way to gather an approval on your loan application irrespective of your CIBIL score.
  • Your life partner's CIBIL score: If your CIBIL score is poor and your husband/wife has got a good CIBIL score, then you may ask for his/her assistance. You can get your loan application approved by making your spouse a joint loan holder.
  • Loans to individuals with low CIBIL scores by some HFCs: There are few organizations that give credit to individuals with low CIBIL scores. This is with higher interest during repayment.
  • Borrow Peer to Peer: This is quite a good practice abroad. Yet, it is being applied in India slowly. Remember that on such loans, the rate of interest is very high and the amount is smaller.
  • Loans on Collateral: You will be allotted loan on collateral such as assets, shares, gold , FDs. There are many other products available as well. Banks don’t complete the process of generating CIBIL report for such instruments.

FAQs on Personal Loan for CIBIL defaulters

What is the connection between Personal Loan and CIBIL score?

Basic CIBIL requirement for a personal loan is at 750. A score beneath 750 means the applicant is not creditworthy and the application will not get processed most likely. Generally, credit scores have a range of 300 to 900. 300 is the base end of the range, while 900 is the upper end.

What is the connection between a bad CIBIL score and high interest on loan?

There are some cases where banks and financial institutes will give personal loan credits to CIBIL defaulters. However, this happens at a high interest rate. Banking firms will offer personal loans to individuals even while they are CIBIL defaulters, at a much higher interest rate.