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A bad credit history is a roadblock to getting any type of loan. Be it a home loan or a Personal Loan. Basically your credit score is not just a three-digit numeral, but a reflection of your financial discipline.
Taking loans to tide over a crisis is not bad. Not repaying them on time can affect your credit scores. Depending on external credit for your day-to-day life is another similar factor.
Of course, bad credit should not always hamper your chances to take a loan. There are ways by which you can get a Personal Loan despite having a bad credit history.
Getting a Personal Loan in Metro Cities
A Personal Loan is one that meets your needs for immediate finances. This could include funding school/college fees, sudden medical bills, wedding ceremony, travel or home improvements. Expensive gifts like jewellery and overdue credit card bills are also included here.
One of the main reasons to take a Personal Loan is to tide over an immediate financial crisis. Borrowers choose this option as the approval process for a Personal Loan is quick and easy. It is true that lenders rely on your CIBIL score to lend you a Personal Loan. But, if you have a bad credit history and a low CIBIL score, you need to know how to apply for Personal Loan.
Causes of Low Credit Score:
A bad credit history affects your chances of getting a Personal Loan in metro cities. find out how and what can affect your credit score.
Exceeding the due date on loan repayments
Many credit applications
Long overdue credit card bills
Going beyond the credit limits
All the above or any one of them is enough reason for a low credit score. Lenders gauge your creditworthiness based on your credit score. A poor credit score is a dampener, which affects your eligibility to get a Personal Loan.
If youre wondering how to get Personal Loan with bad credit, then follow the given points to get a better picture of this:
Convince the banker of your improved repayment capacity, despite a bad credit history. It would then be easy to take a Personal Loan and have it approved as well. The following personal loan documents will evidence the fact that your credit situation has improved.
Last 6 months salary statements
Bank statements of the last 6 months
Income Tax returns of the last 3 years
Identity proof (Govt approved ID like Driving license, Pan card)
Address proof
Once the lender believes you can service the loan repayment, you have the Personal Loan in your kitty.
Other Options
If you have a bad credit score, there are several ways available to apply for a Personal loan even if you have bad credit score
Apply for a Personal Loan in the name of a personsay your spousewho has a good credit score
Provide a collateral like gold, property, or shares
Even if youre successful in availing a Personal Loan, your bad credit can alter the interest rates. There can be a turnaround anytime in your financial situation. Yet, lenders are wary of advancing loans to borrowers with a bad credit history. So, to safeguard against the risk of failure to repay, they charge a higher interest rate.
As such a Personal Loanan unsecured loancarries a high interest rate. With bad credit score, you cannot bargain for a lower interest rate.
A high credit score is the key to Personal Loans at competitive interest rates. It's also important to keep these scores consistent. Improve your CIBIL score and maintain the same and you will not encounter any financial difficulties.
