Can I get a personal loan with a low Cibil score?

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I have a CIBIL score of 690 and I work as a mid-level sales executive in a large pharmaceutical company, with a CTC of 6.5 lakh per year. I would like to benefit from a personal loan of 3,000,000. I have credit cards from HDFC Bank and Axis Bank with a regular payment history. But I have never used loans in the past. What are the chances of my loan being approved?

-Name masked on request

Your CIBIL score seems too low given your regular repayment history. So, I suggest you first check your credit report and look for any errors or misinformation that could lower your credit score.

For most banks and major NBFCs, a CIBIL score of 690 would be at the lower end of their comfort level. Banks and large NBFCs generally prefer to lend to people with a credit score of 750 and above. As personal loans are unsecured loans, lenders place more importance on credit rating when evaluating personal loan applicants than others. Although some NBFC and fintech lenders approve personal loans to those with credit scores below 700, their interest rates are generally higher.

Lenders also consider other factors during the assessment process, including the candidate’s professional profile, EMI/NMI ratio, employer profile, and age. The EMI/NMI ratio refers to the proportion of your monthly net income devoted to servicing your EMI(s), including the EMI for your new loan. Thus, your professional profile, your employer profile and your zero EMI obligation can work in your favor.

I also suggest you check loan options against credit card offers, if any, available from your existing card issuer. Credit card loans are pre-approved loans available to existing credit card holders with a good credit profile and clean repayment history. These loans have instant disbursement and are almost similar to personal loans in terms of product features.

Then check with the bank(s) where you hold savings accounts or term deposits about the availability of personal loans. Many banks offer loans at preferential interest rates to their existing account holders.

Finally, visit an online financial market to compare available personal loan offers with other lenders. These marketplaces allow you to compare loan offers from multiple lenders, including smaller NBFC and fintech lenders, without hurting your credit score.

Once you have all the options available, evaluate them and go with the credit option and the offer with the lowest interest rate, for the loan term and disbursement TAT that suits you.

Question answered by Naveen Kukreja, CEO and co-founder of Paisabazaar.com. Queries and views to [email protected]

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