How Can You Get a Personal Loan for a CIBIL Score of 550 to 600?

Your CIBIL score plays a very crucial role when you have to take a loan. It impacts your chances of loan approval, eligible loan amount and interest rate offered.

The CIBIL score ranges between 300 and 900. Lending companies usually consider a score above 700 as a good CIBIL score. In this blog, we will discuss what you should do if you need a personal loan with a CIBIL between 550-600.

CIBIL Score and Personal Loans

A CIBIL score reflects the creditworthiness of an individual. It is calculated by taking into account your repayment track record, length of credit history, credit utilisation ratio, etc.

Since personal loans are usually unsecured loans, lenders use CIBIL scores to decide whether to approve a loan application or not. If you have a high credit score, lenders would perceive you as a less risky borrower and you would be offered a personal loan at a competitive interest rate. Whereas if someone needs a personal loan for a cibil score of 550, lenders would be reluctant to offer a high loan amount and low interest rate.

Factors Responsible for Low Credit Score

If an individual tries to get a personal loan with a credit score of 600, it would be difficult to find a lender that will give them a loan. If you find yourself in this situation, here are a few possible reasons behind your low credit score –

1. You either made late repayments or missed your EMIs on loans, credit cards, etc. A  bad payment history can substantially affect your credit score.

2. If your credit card limit utilisation is high or close to your credit card limit, your credit score could go down.

3. If you apply for loans or credit cards with many lenders in a short period, your credit score could go down as it shows credit-hungry behaviour.

4. Sometimes, inaccuracies or errors in your credit report can negatively affect your credit score.

Also Read : How to Get a Personal Loan with low Credit Score 

Disadvantages of Having a Low Credit Score

1. Difficulty in getting approval on loans – Since lenders consider individuals with low credit scores as risky borrowers, the chances of loan applications getting rejected would be higher, especially for unsecured loans.

2. Higher interest rate – Lenders charge more interest rates from high-risk borrowers. So if you apply for a personal loan with a credit score of 600, you would have to pay a high interest rate.

3. You won’t be able to negotiate terms – If you want a longer personal loan repayment tenure or less processing fee, you won’t be able to negotiate with a low credit score. Lenders already consider it risky to lend you money. They would be less inclined to give you a favourable deal.

4. You won’t get access to premium credit cards – Banks offer their most valuable customers credit cards with generous credit limits and lots of benefits. No bank would do that with a customer who has a low credit score.

How to Improve Your CIBIL Score?

Finding it hard to get a personal loan for cibil score of 600? Take these necessary steps to increase your credit score –

1. Make timely repayments of EMIs. This will increase your credit score. You can set up reminders or auto-debit so you never forget to pay on time.

2. Don’t apply for multiple loans and credit cards in a short time.

3. Maintain low credit utilisation on your credit cards. It is a good practice to keep it around 30%.

4. Check your credit reports from time to time. An error or a fraudulent activity could bring down your CIBIL score.

Also Read: How to Improve Cibil Score?

How to Get a Loan with a CIBIL Score of 550 to 600

Here are three steps you can take to get a personal loan for cibil score of 550 to 600

1. Take a Secured Personal Loan

If you apply for a personal loan for cibil score of 600, lenders will most likely reject your loan applications. However, if you are ready to pledge collateral to avail a loan, you will find many loan companies who will be willing to lend you money.

2. Add a guarantor or co-signer

You can get a personal loan with a credit score of 600 by applying with a joint applicant. A co-applicant could be your mom, dad, spouse, sibling, etc. Please make sure that your co-applicant has a good credit score.

3. Apply for a Lower Amount

Lending you a small amount is less risky for a loan company. Hence, a lender might agree to give you a small amount of personal loan for cibil score of 550.

Also Read: 8 Common Reasons for Personal Loan Rejection

Conclusion

Having a good CIBIL indicates that you are a responsible borrower and so lenders give you the best deals on credit cards and loans. A good CIBIL score will positively help you towards reaching your financial goals.

If you find yourself in a situation where you have a low CIBIL score, you should immediately take the necessary steps to bring your credit score back to the top.

In case you are wondering whether you are eligible to get a personal loan from Zype, simply download the app and enter the basic details. This takes less than 8 minutes and once you complete this, your credit line offer will be generated in less than 60 seconds.

Frequently Asked Question

My Cibil Score is 600. Can I Get a Personal Loan?
It could be difficult to get an unsecured personal loan for cibil score of 600. To increase your chances of loan approval, you can add a co-applicant or pledge collateral against a loan.
What are the Chances of Approval with a CIBIL Score of 550 to 600?
Borrower with a CIBIL score of 550 to 600 is considered very risky so the loan approval chances are very low. You can pledge a collateral or apply with a co-applicant to increase your chance of getting a loan.
What should I be Cautious of When Applying for a Personal Loan with a Lower CIBIL Score?
If you are applying for a personal loan with a lower CIBIL score, lenders are most likely to apply stricter terms on your loan like lower loan amount, higher interest rate, etc.

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