How to get loan without CIBIL Score?

While you are planning to apply for a loan or get a new credit card, you might hear about the term CIBIL credit score or credit report. A CIBIL score is one of the most commonly used credit score by the banks and other lending entities to determine your eligibility for getting a loan or a credit card. It is calculated by a leading credit information bureau in India named CIBIL in association with TransUnion. CIBIL collects and analyses the information regarding credit card and loans from various banks and NBFCs to calculate the credit score.

Why do you need a CIBIL score?

You need to have a CIBIL score before applying for a loan from any financial entity regulated by the RBI. Lenders verify your credit history and repayment capacity on the basis of your CIBIL score. It is a three-digit numerical representation of your creditworthiness that varies between 300 and 900.

What do lenders need your CIBIL score?

Financial institutions consider credit score while making a loan approval decision. Whether you are applying for a personal loan, home loan, car loan or even a credit card, your credit score is going to give a direct impact on how much you are going to pay for a loan and whether you are getting a loan or not.

As per RBI guidelines, it is mandatory for banks and other financial institutions to

check CIBIL score before sanctioning any type of loan. Below are the three significant considerations taken by banks before lending money.

1. To check the loan repayment history: Lenders generally check the loan repayment history and whether you have defaulted a loan in the past. A lousy loan repayment history project a negative overview of your credit behaviour.
2. To determine the interest rate: A CIBIL score is one of the major components while determining the interest offered by the lenders. A higher CIBIL score helps you to get a loan at a competitive interest rate.
3. EMI to income ratio: Banks and other financial institutions consider the proportion of your income and the monthly EMIs that you pay in your existing loans. If you are already overburdened with your current EMIs, banks can easily reject your loan application as it increases the chance of default.

CIBIL acts as a reliable source of credit information that offers assistance in understanding the above-listed parameters through a credit report. This gives insights about your financial history and likeliness of future credit behaviour.

Reasons for low CIBIL score

CIBIL score is an indicator of your creditworthiness and how you manage your loans and credit cards. A low credit score is a result of non-maintenance of credit. Below are the most common reasons why you have a bad CIBIL score.

1. Skipping monthly instalments: When you skip a monthly instalment, banks see this as a part of poor financial planning. Missing on your monthly EMI can restrict you from taking up a loan in the future as it reflects in your CIBIL report.
2. Not paying credit card dues on time: Not paying your credit card dues under the specified duration can cause a negative impact on your CIBIL score. Additionally, making payment of only minimum dues quite often can also pull down your CIBIL score to a great extent.
3. A number of personal loans: It is advisable to avoid taking personal loans as they are unsecured loans and can cause a fall in your CIBIL score. Too many personal loans at a time work like a red flag for the financial institutions.
4. Not paying attention to the fault in your credit report: You may lose your CIBIL score by not paying enough attention to your credit report. It is advisable to check your credit report at least once a year. It gives you a self-analysis of your credit repayment behaviour. Moreover, it is equally important to look for errors and report such errors by filling up the online dispute resolution form to get them corrected.

Getting a loan without CIBIL score

While CIBIL is playing a critical role in the loan approval process, you may have heard that you cannot get a loan without a CIBIL score. However, this is not entirely true. You can still get a loan despite having a poor or no CIBIL score. Below-listed are the alternatives that you can try to get a loan without a credit score.

1. Prove that you have a regular and a reliable source of income that can support the EMI payments.
2. Asking for a higher loan amount with no credit score can cause rejection. From a lender’s point of view, you may default the payment. In such a case, if you apply for a lower amount of loan, a lender may feel confident and sanction the loan amount.
3. Apply for credit with a joint loan account holder. That can be anyone from your family, relative or friend who has a decent CIBIL score.
4. You may also add a guarantor to your loan. A guarantor who is having a saving or fixed deposit account with the lending bank.
5. It is very much possible that your credit report includes errors in the records. Such mistakes can ruin your credit scores for no fault of yours. Thus, it is essential to regularly check your credit report and correct any errors that you find.
6. You can also approach rural banks and cooperative banks to get a

loan without CIBIL score. The interest rate charged by these banks is usually higher.

1. You can opt for a secured loan just like in case of a home loan, you put the property agreement as a security against the loan amount. Secured loans are easy to obtain even without CIBIL score.
2. You may also seek the help of your employer to get a loan. Many employers have this facility to grant a loan to the employees especially the those who has been working for a few years and are an asset to the organisation.
3. The last option we would suggest is to go to the private lender to get a loan. The interest charged by private moneylenders are the highest, and the loan may cost you up to the double amount of the loan taken.

You can improve your CIBIL score in a couple of months by paying the credit dues on time and maintaining a healthy credit history. If you do not require a loan on an urgent basis, it is advisable to work on your CIBIL score before applying for a loan.

Hi this is Somesh from Mumbai. I am working with the one of the leading online insurance broking firm as a customer relationship manager. I like to discuss with customer to solve their problem and queries. More Peoples still unaware about insurance