Finding instant loans or personal loans with low credit score can be challenging. A CIBIL score, also known as a credit score, is a three-digit number issued by CIBIL (Credit Information Bureau India Limited). It ranges from 300 to 900 and measures the ‘credit-worthiness’ of an individual. A score above 750 is considered a good credit score. Anything below that is usually considered to be low and can be an issue for lenders and institutions that grant credit. In other words, a credit score determines whether you are eligible for a credit card loan or not.
What are the reasons and repercussions of a low credit score in India?
When applying for a loan, banks require you to complete the KYC process steps and to submit your credit scores. If you credit score happens to be low, these factors might help explain why.
1. Paying your credit card bills late: Even a slight delay in bill payment can cause your
CIBIL score to drop. Defaulting on your EMI repayment is another common reason. Continuous late payments will significantly bring down your credit score.
2.Reaching your credit limit too often, too soon:
All cards come with a credit limit. Exorbitant spending may create an impression that you are someone who spends carelessly and has an issue repaying loans. Lenders will hesitate to give you loans in the future as they might not think you have the discipline to utilize your loan wisely. This is why it’s really important to start saving money and plan your finances.
3. Too many loan applications:
Applying for multiple loans simultaneously raises a red flag for creditors. More loans means greater amounts to repay which in turn means that you are unlikely to pay your dues in time.
4. Credit inactivity:
While having a poor credit history can negatively impact your CIBIL score, having no history can actually have the same effect. If the lender has no background information about you, they will be unable to determine whether you are worthy of a loan or not. Since a majority of Indians don’t have access to credit cards, this can create a vicious cycle of loan rejection. An individual without a credit history is not eligible for a credit card, but without a credit card he/she has no credit history.
How to get a personal loan with low credit score
In a country like India, where we are still transitioning from cash to cards, a credit loan is a big jump. But,what if you don’t have a credit card? Can you still be assigned a credit score? And can you still take an instant loan for low CIBIL score? Yes you very much can!
Here are a few factors to consider when looking for a low CIBIL score loan provider.
1. Research the lender
Choosing the right lender is very important. Make sure that the low CIBIL score loan provider is credible. The last thing you need is losing your hard-earned money to a scammer. Before deciding on a lender, it’s important to check out their website and credentials. It’s always a good sign if the brand has positive user testimonials as this indicates that others have had a good experience with the lender.
2. Check the interest rate
Another important factor to look at is the interest rate at which the loan is being offered. Some lenders might accept a low credit score but at a very high-interest rate. In many cases, you might be charged more than 14% interest on your loan.
3. Look at online lenders
In the last few years, start-ups which use Artificial Intelligence and Data analytics to push
people to take loans in the absence of a credit card have come up. These loan providers strongly believe that a low credit score or no credit score should not be a barrier to credit loans. Zest Money is one such company that has pioneered this initiative in India. With ZestMoney, all you need to do is complete your profile and sign up. Once you create an account, ZestMoney uses AI and analytics to assign you a credit limit. This credit limit is based on the KYC, PAN and other details including past transactions and online shopping behaviour.
With ZestMoney credit limit, you can go on a shopping spree across ZestMoney partner websites. You can buy laptops, smartphones, insurance loans, holiday packages and so much more without a credit card. A no-cost EMI option is the gateway to card-free payments. There’s no need to worry about your credit score. It’s much faster to attain loans this way than to traditionally build up CIBIL scores.