A CIBIL score is a 3-digit dynamic number that assesses the loan eligibility of a borrower. However, a low score might make it difficult for him/her to get a personal loan approval. However, banks and non-banking financial institutions also offer personal loans without CIBIL verification. Even if the applicant does not have a loan history, a record of timely payment of credit card dues works in his/her favour. This gives prospective lenders a certain degree of assurance about the probability of receiving repayment of debt from the applicant within the pre-determined date.
For CIBIL defaulters, some of the evaluation criteria during loan approval process are the applicant’s high monthly income, whether he/she is employed by a renowned Fortune 500 company, good CIBIL score of his/her spouse, etc. Meeting these parameters may make him/her eligible for a personal loan. The only difference from personal loan packages offered to applicants with a good CIBIL score is that lenders quote a heavy rate of interest and offer higher EMIs on personal loans without CIBIL verification.
Payment history – Lenders check for frequency of amount overdue cases and defaults in payments, which acts against a borrower getting a loan approved
CIBIL Score and Report – It is one of the most essential factors that determines the chances of loan approval, since it defines the borrower’s credit health
Income and employment status – These details help the lender assess the borrower’s ability to repay the debt, if the loan application is approved
EMI to Income Ratio – Borrowers have a higher chance of securing a loan with an EMI that is not more than about 50% of his/her monthly income. This will be lower if the borrower already has other loans to be repaid
Account Information – Lenders thoroughly analyse the number of suits and those written off, if any
The above factors are clear indicators of the importance of CIBIL Score and Report during the loan approval process. However, there may be two circumstances under which a borrower may want to opt for a personal loan without CIBIL verification–
Guidelines on Improving Low CIBIL Scores
Late or non-payment of EMIs, and dues on loans and Credit Cards is one of the leading factors that adversely affect CIBIL scores. This reflects on the borrower’s inability to afford the monthly payment of debts or being careful in paying within due dates, making lenders feel sceptical of offering a personal loan.
If a low CIBIL Score is the reason why you want to opt for a personal loan without CIBIL verification, the following are some guidelines on how you can improve your score:
Maintain a healthy Credit Card utilisation ratio, that is, prevent yourself from exhausting the entire limit of your Credit Card(s). The recommended amount is generally between 30% and 40% of the total Credit Card limit. Also, ensure that you don’t use too little of the available limit.
If one of your loans is nearing the end of its tenure, repay the debt within the due date every month and don’t apply for another loan immediately after its closure. This again negatively reflects on your ability to maintain liquidity.
If you have a recent history of several rejections of credit card and loan applications, stop applying till the time your score has improved.
Guidelines on Improving Loan Eligibility When There is No Credit History
When you have no history of availing a loan, Credit Card transactions or EMIs, your CIBIL Score will be nil. In that case, it will be difficult for lenders to evaluate your payment habits and creditworthiness. Here’s how you can increase your scope for being eligible for a personal loan.
Apply for a secured loan, that is, a car loan or home loan. These are easier to avail and will also help you start your credit history.
Opting for a credit card from a bank where you hold a salary account or savings account for a considerably long time. In case you are not eligible for it because of low creditworthiness, you can opt for a Credit Card against a Fixed Deposit. However, make sure that you convert to an unsecured Credit Card at the earliest as a Credit Card against a FD will adversely affect your credit score in the long-run.
If you are employed at an organisation that shares a healthy relationship with the bank where it holds its salary account, you will automatically be eligible for a Credit Card on having your salary account opened with them. Besides, if your company has collaborated with a bank to offer loans to its employees, you stand a greater chance of being entitled to better interest rates.
You may improve on your CIBIL Score or start your credit history by following the above tips. However, in case you would not like to consider either of these options, you may also attempt to opt for a personal loan without CIBIL verification. Lenders cease from considering personal loan applications from individuals with low or no CIBIL Scores. Individuals have a comparatively higher chance from Cooperative Banks, though interest rates are high. Here’s how borrowers have a higher chance of being eligible for a personal loan without CIBIL verification:
Collateral loans: You can opt for loans against collaterals like assets, shares, gold loan and FDs and such other products for which banks usually do not evaluate the CIBIL Report
Monthly income is enough for you to repay the loan: If your monthly income is sufficient for you to repay the debt on time.
Peer to Peer Lending: If you are looking for a loan of a small amount and are ready to pay a high rate of interest, this may be ideal for you.
Make use of your parent’s or spouse’s CIBIL Score: If either of your parents or spouse has a good CIBIL score, you can apply for a personal loan by adding his/her name as a joint loan holder.
How can I apply for a personal loan without a CIBIL score?
You may select one of these options to apply for a personal loan without a CIBIL score:
Apply for a secured loan, that is, a car loan or home loan. These are easier to avail and will also help you start your credit history.
Opting for a Credit Card from a bank where you hold a salary account or savings account for a considerably long time. In case you are not eligible for it because of low creditworthiness, you can opt for a Credit Card against a Fixed Deposit. However, make sure that you convert to an unsecured Credit Card at the earliest as a Credit Card against a FD will adversely affect your credit score in the long-run.
If you are employed at an organisation that shares a healthy relationship with the bank where it holds its salary account, you will automatically be eligible for a Credit Card on having your salary account opened with them. Besides, if your company has collaborated with a bank to offer loans to its employees, you stand a greater chance of being entitled to better interest rates.
How can I make my way through CIBIL verification despite a low CIBIL score?
If a low CIBIL Score is the reason why you want to opt for a personal loan without CIBIL verification, the following are some guidelines on how you can improve your score:
Maintain a healthy Credit Card utilisation ratio, that is, prevent yourself from exhausting the entire limit of your Credit Card(s). The recommended amount is generally between 30% and 40% of the total Credit Card limit. Also, ensure that you don’t use too little of the available limit.
If one of your loans is nearing the end of its tenure, repay the debt within the due date every month and don’t apply for another loan immediately after its closure. This again negatively reflects on your ability to maintain liquidity.
If you have a recent history of several rejections of credit card and loan applications, stop applying till the time your score has improved.
