NBFC Loans Without CIBIL Score: Your Complete Guide

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A non-banking financial institution (NBFC) is like your cool aunt – easy to deal with, has fewer restrictions, and offers you money at the end of a visit.

In other words, NBFCs are not constrained by the regulations that prevent traditional banks from freely handing out loans. For example, banks rely on CIBIL scores to assess an applicant’s creditworthiness. The application is instantly rejected if the individual does not meet the minimum credit score requirements.

An NBFC is a life-saver as it disburses instant loans even with no/low credit score. However, the loans come with certain conditions, such as high interest rates and short repayment periods, to compensate for the associated risks.

Keep reading to know how to get NBFC loans without a CIBIL score.

Understanding CIBIL Score

A CIBIL score shows how good you are at paying back borrowed money. It’s a score between 300 and 900. Getting closer to 900 means you can get better offers for loans and credit cards. Most lenders, like banks and finance companies, look for a score above 750.

Who figures out your CIBIL score?

The credit bureau TransUnion CIBIL calculates your score. They look at how you’ve paid back loans, what kind of loans you’ve had, how long you’ve had credit, and more to calculate your CIBIL Score!

Factors Influencing CIBIL Score:

Here are the four main factors that affect your CIBIL score:

1. Payment History (35%) – How well you pay back your loans and bills. Paying on time improves your score.

2. Amount Owed (30%) – How much money do you currently owe to lenders. Borrowing less helps increase your score.

3. Credit Type and Duration (10% to 15%) – The kinds of loans you have and how long you’ve had credit. A mix of different loans and a longer history can boost your score.

4. Credit Mix (10%) – The variety of credit types you have, like home loans, car loans, and credit cards. Having a good mix can positively affect your score.

Impact of a Low CIBIL Score on Traditional Loan Approvals

A low CIBIL score indicates higher credit risk, leading to:

• Higher interest rates on loans.
• Lower chances of loan approval.
• Stricter loan conditions or lower loan amounts.

Importance of CIBIL Score for NBFC loans

To be fair, having a good CIBIL score helps secure both NBFC and bank loans. We, too, recommend creating a good credit history before applying for loans. However, this is not possible for first-time borrowers.

First-time borrowers often have a credit score of 0 or -1. Just because it’s in the negative does not necessarily mean it’s bad.

0 Credit Score

A 0 credit score implies that the individual’s credit history is less than six months old. As a result, the credit reporting bureau lacks enough data to provide a credible score.

-1 Credit Score

On the other hand, a -1 credit score means that the individual has no credit account, meaning they have yet to take loans or credits from financial institutions.

NBFCs analyse the income statements of such individuals before approving their loans. Banks have the infrastructure to do the same but avoid it as they are inherently risk-averse.

8 Types of Instant Loans Without CIBIL Score:

Here’s a simple list of different types of instant loans that don’t need CIBIL scores:

1. Personal Loans: You can get these without putting up anything as security. Lenders look at your job and how much you earn instead of your CIBIL score.

2. Gold Loans: You borrow money by giving gold as security. Your credit history isn’t as important because the gold backs the loan.

3. Title Loans: You use your vehicle’s title as security for the loan. The loan amount depends on your vehicle’s value, not your credit score.

4. Microfinance Loans: Small loans for people who can’t easily use regular banks. These loans don’t need strict credit checks.

5. Peer-to-Peer Loans: Borrow money directly from people through online platforms. They look at different things, not just your credit score.

6. Cryptocurrency-Backed Loans: Get loans by using your cryptocurrency as security. The amount depends on your crypto’s value, not your credit history.

7. Salary Advances: Your employer gives you part of your future salary in advance. Credit checks are minimal, based on your job.

8. Online Installment Loans: Quick, short-term loans from online lenders. They are easier to get because they don’t check your credit as much.

Also, Read: Credit Score vs CIBIL Score: Are they Even Different?

Calculate Your Personal Loan EMI 

Different Methods to Apply for Loans without CIBIL Score

NBFCs have flexible policies that help you bypass the CIBIL score requirement. In addition, first-time applicants also get some leeway while applying for online loans.

Here are 3 ways to successfully secure a loan.

1. Apply for a Small Loan Amount

Small loan amounts are best for first-time borrowers as they are easy to repay and are less risky for NBFCs. They easily approve smaller loan amounts even without a CIBIL score.

However, you need to opt for a secured loan by offering collateral if you want to borrow a larger amount. The loan amount is usually a percentage of the asset’s value and reduces the risk for lenders.

2. Apply with Guarantor

Applying with a guarantor or co-applicant is a surefire way to secure a loan. In such cases, the loan officers evaluate the guarantor’s profile and credit score before approving your loans.

But, remember, the co-applicant becomes liable to pay off the remaining loan amount in case of defaults.

Choose your partner, parent, spouse, sibling, or friend to become your co-applicant. Moreover, your co-applicants can negotiate for better terms if they already have a working relationship with the institution or a good CIBIL score.

3. Steady Income Proof

NBFCs overlook the credit score requirement if you furnish proof of steady income. Salary slips, tax returns, business income, and bank statements reflect your repayment capacity. Employment with MNCs and established companies also enhances your position as a borrower.

Also, Read: How to Get a Business Loan on Low Credit Score?

Documents Required to Apply for NBFC Loan Without CIBIL

Applying for a loan without a CIBIL score is nerve-wracking. It feels like appearing for an exam without any preparation. But, it need not be the case.

Compiling all the essential documents before applying is sure to take some of the burden off your shoulders. Below, we provide a list of all the documents you require to apply for an NBFC loan.

For Salaried Individuals

For Self-Employed Individuals

Since most new-age NBFCs operate through online websites and apps, keep scanned copies of all your documents, including your passport-size photograph and signature, handy.

Also, Read: How to Get Loan Without a CIBIL Score?

Steps to Apply for NBFC Loans Without CIBIL

Take extra precautions while choosing an NBFC platform or moneylending mobile applications. Few dubious lending apps access your phone contacts and spam them with unnecessary text messages and calls about your loan repayment status.

Trust us, you do not want your high school Maths teacher to know about your repayment schedule.

So, here’s how you apply for NBFC loans without a CIBIL score.

• Research and shortlist NBFC platforms with no minimum CIBIL score requirements
• Create your profile on their website or mobile app
• Enter your personal details, like address, age and gender
• Enter professional information, such as employer’s name, and monthly income
• Choose the loan amount and term that you require
• Re-verify all the details
• Upload all the required documents through their portal

The financial institutions verify the documents within a few hours and instantly disburse the loan amount to your account.

A few established NBFCs have offline branches where you can apply for loans. Here’s how you do it.

• Visit your closest branch
• Contact the loan officer
• Fill out the application with all the necessary details
• Submit attested photocopies along with the application

The rest of the verification and disbursement process is the same as the online method.

Before you take up a loan, understand the advantages and disadvantages of a loan without a CIBIL score:

Pros and Cons of Getting a Loan with a Low CIBIL Score

Pros:

1. Accessibility: It’s easier to get these loans if you have a low or no CIBIL score.

2. Quick Approval: These loans are approved quickly, which is great for emergency financial needs.

3. Flexible Criteria: Lenders look at other things, not just your credit score, making it easier to qualify.

4. Credit Improvement: If you pay back these loans on time, it can help improve your credit score.

5. Variety: There are many types of loans available, from personal loans to those using collateral like gold.

Cons:

1. High-Interest Rates: Because it’s riskier for lenders, they often charge higher interest rates.

2. Small Loan Amounts: You might not be able to borrow as much money because of the perceived risk.

3. Short Repayment Terms: You might have to pay back these loans quickly, which can mean higher monthly payments.

4. Risk of Predatory Lenders: Some lenders might offer unfair terms or be misleading.

10 Tips For Improving CIBIL Score

1. Keep an Eye on Your Credit Report:

Get your credit report from CIBIL or other agencies. Check for mistakes and report them quickly.

2. Always Pay Bills on Time:

Paying your bills and loans on time is crucial for a good credit score. Use automatic payments to avoid missing due dates.

3. Keep Credit Card Use Low:

Try to use a small part of your credit limit. High credit use can hurt your score. Pay off your full balance if possible.

4. Have Different Types of Credit:

A mix of credit cards, loans, and mortgages is good for your score. Only borrow what you can afford to pay back.

5. Don’t Open Many New Accounts Quickly:

Getting several new credit lines in a short time can lower your score. Only apply for new credit when needed.

6. Pay Off Overdue Debts:

If you owe money or have debts in collections, try to pay them off and make sure this is shown correctly on your credit report.

7. Consider Secured Credit Cards:

If getting regular credit cards is hard, think about secured cards. They can help rebuild your credit.

8. Limit Credit Checks:

Too many credit checks can lower your score. Apply for credit only when you really need it.

9. Get Professional Help if Needed:

If you’re struggling with your credit score, get help from a credit counseling service. They can offer advice on handling debt.

10. Be Patient With Your Credit Score:

Improving your credit score takes time. Keep up good financial habits, and regularly check your progress!

Also, Read: 8 Best Ways to Improve Your CIBIL Score Quickly

Conclusion

Choosing the right NBFC platform is a tricky process. Even more so, when you have to filter out the suspicious moneylenders who want to defraud you. So, what do you do to make this process easy?

Simple, you choose Credmudra.

Credmudra is not a lender itself, but the online aggregator helps you find the best lenders based on your financial requirements. Credmudra works with multiple NBFCs that offer personal loans without CIBIL scores.

Furthermore, get connected with legitimate lenders who won’t misuse your credit score and other financial and sensitive information.

In addition, Credmudra:

• Goes beyond CIBIL scores and uses other data points to create a custom credit profile
• Offers pre-underwriting services to help people without a credit history
• Employs safeguards to protect the user’s privacy and data
• Addresses queries related to the lending process

In short, Credmudra makes loans accessible to everyone, even those without a credit history.

To avail your first loan, get started by signing up on Credmudra for free.

FAQs

1. How do you Maintain a CIBIL Score?

Follow the steps to maintain your CIBIL score.

• Make timely repayments
• Keep your overall credit utilisation ratio below 30%
• Do not make multiple loan inquiries in a short period
• Report any inaccuracies and incomplete credit details to CIBIL

2. Why has my CIBIL Score Gone Down?

CIBIL scores can go lower due to multiple factors.

• Multiple ongoing unsecured loans
• Credit utilisation over 30%
• Delays in EMI payments
• Loan defaults
• One-time settlements
• Multiple loan inquiries in a short time frame
• Multiple loan application rejections

3. Why is My CIBIL Score -1?

A CIBIL score is -1 when the individual has no credits or loans to their name.

4. Can I Get Personal Loans with No CIBIL Score?

Yes, you can get a personal loan with no CIBIL score. However, the lenders might charge a higher interest rate and offer smaller amounts to offset the risk. But, these conditions can be negotiated if you bring in a co-applicant or offer an asset as collateral.

5. What Factors Affect the CIBIL Score?

Repayment behaviour, foreclosures, credit utilisation ratio, and one-time settlements, all affect your CIBIL scores.

Also, Read: How To Get Credit Card Without CIBIL Score: 4 Ways