If you have defaulted on a loan in the past, you may be struggling to get approved for a personal loan. This is because banks and financial institutions use your credit history to assess your creditworthiness. However, there are options available for CIBIL defaulters to get an instant loan.
In this blog post, we will discuss what CIBIL is, why it matters, and how to get an urgent loan if you are a CIBIL defaulter.
Before we dive into the details of getting a loan as a CIBIL defaulter, let’s first understand what a personal loan is.
What is a Personal Loan : A personal loan is an unsecured loan that you can take for any purpose. Unlike a home loan or a car loan, you don’t have to use the loan amount for a specific purpose. You can use it to fund a wedding, a vacation, or to pay off other debts. If you want a personal loan and have a bad CIBIL score or no CIBIL score, you can still get a loan, want to know how?
Read this blog to learn how to get a loan without CIBIL.
What is CIBIL? : CIBIL is short for Credit Information Bureau India Limited. It is a credit information company that maintains credit records of individuals and companies. Whenever you apply for a loan or a credit card, the bank or financial institution will check your credit score and credit report from CIBIL.
What is a CIBIL Score? Your CIBIL score is a three-digit number that ranges from 300 to 900. It is calculated based on your credit history, including your payment history, credit utilization, length of credit history, and new credit inquiries.
If you think CIBIL score and Credit score are the same, they are NOT, read this blog to find out how.
A high CIBIL score indicates that you have a good credit history and are more likely to get approved for a loan or a credit card. On the other hand, a low CIBIL score indicates that you have a poor credit history and may not get approved for a loan.
Range of CIBIL Score
Grading | Range of CIBIL Score |
Excellent | 750-900 |
Good | 650-750 |
Average | 550-650 |
Bad | 300-550 |
Also, Read: Credit Score vs CIBIL Score: Are they Even Different?
If you have defaulted on a loan or a credit card payment in the past, you may be considered as a CIBIL defaulter. This means that your credit score has been negatively impacted, and you may find it difficult to get approved for a loan or a credit card in the future. While a CIBIL defaulter isn’t strictly defined but typically refers to someone with a score below 600, often due to late or missed loan repayments. Frequently applying for several credit cards or loans in a short time can also lower the score. For those labeled as CIBIL defaulters, securing urgent loans requires understanding certain strategies, which are further explored in the subsequent section.
Also, Read: What is Credit Score? Factors, Calculation & Ways to Improve
If you are a CIBIL defaulter and need an urgent loan, here are some options you can consider:
Peer-to-peer lending platforms connect borrowers with individual investors. These platforms may be more willing to lend to CIBIL defaulters, but the interest rates may be higher than traditional banks.
If you have gold jewelry, you can pledge it as collateral and get a loan against it. The interest rates for gold loans may be lower than personal loans, but you risk losing your jewelry if you are unable to repay the loan.
If you have a fixed deposit with a bank, you can get a loan against it. The interest rates for these loans may be lower than personal loans, but the loan amount will be limited to the amount of your fixed deposit.
If you own a property, you can pledge it as collateral and get a loan against it. The interest rates for these loans may be lower than personal loans, but you risk losing your property if you are unable to repay the loan.
Also, Read: Get a Personal Loan Without Credit Score – 5 Fool-Proof Ways
If you need an urgent loan and have a low CIBIL score, here are some steps you can take to improve your chances of getting approved:
Check your credit report for errors or discrepancies. If you find any errors, dispute them with CIBIL and get them corrected.
Pay off any outstanding debts or dues that may be negatively impacting your credit score. This will improve your credit utilization ratio and show that you are responsible with your finances.
Take steps to improve your credit score, such as paying your bills on time, reducing your credit utilization, and avoiding new credit inquiries.
Apply to multiple lenders to improve your chances of getting approved. However, avoid submitting multiple loan applications at the same time as this can negatively impact your credit score.
If you’re exploring the possibility of getting a personal loan but you are a CIBIL defaulter, then securing approval can be challenging. To qualify, you’ll need to meet the following criteria:
Below are the common documents lenders ask to submit from a CIBIL defaulter:
To remove your name from the CIBIL defaulter list:
Credmudra helps the CIBIL defaulters by providing:
Also, Read: How to Get Loan Without a CIBIL Score?
CIBIL defaulters can consider peer-to-peer lending, gold loans, loans against fixed deposits, or loans against property.
You can improve your chances of getting approved for a loan by checking your credit report for errors, paying your dues, improving your credit score, and applying to multiple lenders.
In India, failing to repay a loan is not a criminal offense and doesn’t lead to jail time. It’s treated as a civil issue rather than a criminal one.
CIBIL maintains a comprehensive Credit Information Report that includes an individual’s credit history and defaults. This record is retained for a minimum of 7 years from the date of the first delinquency. However, CIBIL does not have the authority to delete or alter these credit records.
Also, Read: NBFC Loans Without CIBIL Score: Your Complete Guide
Credmudra is a digital platform designed for financial services leaders in India to share their insights and perspectives beyond the limits of social media. It is a purpose-built platform for experts from banking, NBFCs, fintech and others to reach the right audiences and transform finance. With Credmudra, finance professionals can establish themselves as thought leaders and engage meaningfully with India's top money minds and those shaping the future of lending. Unlike social media, this platform offers a space for compelling discussions and community building within the industry. Credmudra can elevate the quality of discussions and collaboration among influential authors in Indian finance.
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