Loan application rejected? Here’s how you can still get a loan


Loan application rejected? Here’s How You Can Still Get A Loan Photo credit: PTI

New Delhi: Credit score is one of the key parameters that is carefully used by all commercial banks, microfinance institutions, non-bank financial corporations and other cooperative lenders in deciding an individual’s eligibility for a loan. A credit score is a conclusive framework that is formed on the basis of repayment history, existing liabilities, debt service capacity, total income, number of outstanding credit cards, rate of payment. ‘use of credit, etc.

Banks and other regional lenders are very likely to reject loan applications from people with low credit scores because banks believe that these people will not be able to adequately meet their debt obligations. ‘to come up.

In order to improve your credit score, it is advisable to pay your bills on time. When examining your credit report, lenders will see how reliably you pay your bills. Pay your bills on time because late payments not only result in penalties, but also affect your credit score. Also set up automatic payments or monthly reminders if you forget to pay your bills.

However, there are ways to try to get a loan even if your credit rating is low.

Apply for a loan from an NBFC:

Instead of applying to a bank, a client with a low CIBIL score can apply for loans from NBFCs because the probability of getting loan approval is high there because NBFCs have relaxed policies towards clients with low credit scores. Before applying for a loan, you should know that every loan application assessment is supported by the examination of the credit report which often leads to in-depth investigations.

If your CIBIL score is low, it is best to apply for an NBFC. However, an important thing to note here is that the interest rates charged by NBFCs are generally higher than those offered by banks.

Secured loan:

Some banks and financial institutions approve loans from people with even low credit scores, as long as they apply for a mortgage backed loan, that is, a secured loan. Those with low credit ratings and in urgent need of funds may consider options like a gold loan, a loan for property, or a loan for securities, where the credit rating has a relatively less impact. In this case, the loans are generally accepted by the lenders as collateral to disburse a secured loan.

Solidarity loan:

Those with a low CIBIL score can add their spouse or other family member who has a decent credit history as a co-borrower or guarantor, which can increase the chances of getting a loan at a competitive rate.

Small loan:

Since a lender is reluctant to offer a huge loan to someone with poor credit rating, one can try to take out a small loan so that it is easy to repay. This will strengthen creditworthiness in the process. Once their credit score improves and their credit history is better, they can opt for a larger loan from a bank or other financial institution.

Note that your credit score can be affected due to a number of factors such as missed deadlines, a poorly managed credit cycle and more. A high credit score ensures that your loan application is approved and the money is paid out quickly.