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A Brief Guide on How CIBIL Score Defaulters Can Apply for A Loan

Submitted by admin on September 16th, 2024

Individuals with low credit scores face numerous challenges when trying to secure a loan. Defaults and missed loan repayments make it difficult for defaulters to get an emergency loan. A poor credit score can negatively impact one’s financial future.

Fortunately, using the right strategies to improve their credit scores, even CIBIL defaulters can avail of loans. Whether car loans, personal loans, or home loans, defaulters can eventually secure all such loans with some effort.

Let’s explore how.

Who is a CIBIL score defaulter?

While the term CIBIL score defaulter is not officially defined or recognised, it is used to refer to individuals whose credit score is under 600 owing to their high risk of defaulting.

Challenges faced by CIBIL defaulters

Borrowers who have a bad credit history and consequently a poor credit score come across various roadblocks when applying for loans.

Higher interest rates

Borrowers with poor credit scores are offered loans at higher interest rates irrespective of their loan amount to safeguard lenders from potential losses.

Stricter loan terms

Short repayment tenure, small loan amounts, and limited use scope are some restrictive and expensive terms associated with loans for CIBIL defaulters.

Limited lender options

For borrowers with low credit scores, formal lending sources are limited. A majority of financial institutions decline loans to such borrowers. Hence, informal/secondary lending sources with their unfavourable terms become their only choice when securing an urgent loan.

Security requirement 

Often CIBIL score defaulters are granted loans against significant collateral such as cars, homes, and other property.

Negative impact on future financial opportunities

A poor CIBIL score also affects a borrower’s future borrowing potential, service terms of financial instruments, and credit card purchases.

Online loan application process for CIBIL score defaulters 

Here’s a brief step-by-step guide:

Find suitable lenders

Start by looking for lenders willing to provide quick online loans to CIBIL defaulters. Next look into their terms and conditions.

Explore the terms and eligibility 

As a CIBIL defaulter, don’t apply for an emergency loan without fully exploring and understanding the eligibility criteria and terms. For individuals with low credit scores, terms and conditions of online personal loans are quite different.

Prepare your documents 

Gather all necessary documents for the application process, including your bank statements and identity proofs.

Apply online immediately

Visit your preferred lender’s official website and apply using their application form. Thoroughly check your filled out form to ensure accuracy and completion.

Wait for a response

Your lender will review your application and if you are eligible and your documents are correct, your loan will be approved almost instantly.

In case your loan is rejected, the reasons will be stated. These reasons can provide clarity on what you must do next to secure a loan the next time you apply.

Tips to improve your credit score

If you are unable to secure an urgent loan as a CIBIL score defaulter, your next step should be to improve your credit score. Here’s how you can do so.

• Check your credit report regularly
• Pay off all debt
• Keep your credit utilisation low
• Avoid taking multiple loans simultaneously
• Spread your credit
• Improve your credit history
• Seek professional debt counselling

For more information on how you can secure an emergency loan online even as a CIBIL score defaulter, call or sign up to consult a Dailyfinserv expert today.