September 16, 2024 · 11 mins read
Santosh Kumar
Are you having a medical emergency and needing funds to pay your medical bills? Are you looking for financial support to start your dream business or want money to buy your favourite vehicle? Then, getting a loan is a great option.
Though borrowing money is traditionally not considered a good idea, getting a loan for educational needs, medical emergencies, purchasing properties, or starting or improving your business is worth it and will be an investment in a better life in the future. But what if lenders reject your loan application, saying that you have no CIBIL score when you haven't even heard the word CIBIL score?
If you are someone with no CIBIL or wondering how to get loan with low CIBIL score, or who urgently needs a loan to fix your financial problems or to improve your lifestyle, then you are not alone.
But before discussing the possible ways to get a loan without a CIBIL score, let's understand what a CIBIL score is and why you don't have one.
When someone visits a bank or financial service for a loan, how does the lender decide on whether to approve or reject the loan application when they are not aware of the creditworthiness of the borrower? They need some criteria to check whether the person is creditworthy and capable of repaying the loan, right? The Credit Information Bureau (India) Limited, i.e., CIBIL, comes to the rescue. It provides a 3-digit credit score ranging from 300 to 900 based on a few parameters in your credit history. Usually, banks, financial institutions and lenders will refer to the CIBIL score to understand your responsibility regarding borrowing and paying back your loans and bills. If you have a good score, then you will be a creditworthy person from the perspective of lenders, and they will be ready to offer you the loan without a second thought or much delay. The more your CIBIL score, the better you can get the loan approved. Though there is no specific value for the best CIBIL score, a score of more than 750 is considered a good value. This blog explores ways on how to get loan with low CIBIL score fastly.
Read More: CIBIL Vs Experian
The Credit Information Bureau (India) Limited gives you a score based on your previous credit information. But how can your credit score be calculated if you have no credit history? In such a case, the CIBIL marks your score as zero or NO CIBIL.
This usually happens with teenagers and people who haven’t taken any loans previously. If you have never taken a loan or own a credit card, the bureau will be unable to identify your creditworthiness and give a score. Even if you have a credit history that is less than 6 months, you will have a no CIBIL score or NA (No Activity or Not Applicable) CIBIL score. No CIBIL score is also referred to as NH which stands for No History.
No credit score means that you are new to credit and are starting your financial journey, and there is nothing wrong with that, even if you start at some later stage of your life. If you have no credit score, just don’t wait further. As a borrower with No CIBIL score, you are a risky borrower in terms of lenders. So start taking a few simple steps to gradually build your credit score or if you want ways on how to get loan with low CIBIL score.
Read More: How to Improve CIBIL Score after Default
You can follow the steps below to build a credit score or how to get loan without CIBIL score as a newbie.
1. Opt for Secured Credit Cards to start building your credit score. You can avail of secured credit cards upon depositing an amount, which will be used to recover your credit amount if you fail to make the payments. You can build a credit score by making timely payments and then move on to unsecured credit cards or loans.
2. Buy Now Pay Later (BNPL) is another way to build your credit score. BNPL service providers collaborate with retailers and let you purchase products for which you can remit the amount in instalments. This is a great option for building credit scores and avoiding high financial burdens. You can pay the instalment on time to show that you are a responsible borrower and increase your credit score.
3. Getting a new credit card from the bank where you already have an account is also a great choice to build your CIBIL score, especially when you are a new borrower. As the bank authorities are already familiar with your financial transactions, they are more likely to offer credit cards unhesitatingly and without delay. By wisely using credit cards, you can build your score over time.
Though the above-said options are great to start building your credit score, it will take time to get a decent score to prove yourself as a creditworthy person from the perspective of lenders.
Even though a zero credit score is not a negative aspect regarding financial terms, lenders may not have a strong base to believe in your financial responsibility for repaying your debts and loans. So, you will be subjected to an additional layer of scrutiny, and the process will become more complicated and lengthy. Unless you provide them with additional details and documents to prove your financial capability and responsibility, you are at risk of being considered a risky borrower by lenders, which may reduce your possibility of availing a loan.
Read More: Tips to Improve Your CIBIL Score Fast
Are you tired of searching for “ how to get loan without CIBIL score”. With some financial urgency and zero CIBIL score, you cannot start building your credit score by following the above-said steps, as it may take at least a few months to reach a safer credit score limit. Below are some other options a no-credit-history borrower can look into regarding getting a loan application sanctioned without undergoing credit inquiry.
Lenders refer to the CIBIL score to understand your payment capability and creditworthiness. Provide some income proof so that it becomes easier for the lenders to evaluate your payment capability even with no credit. But that doesn’t mean only salaried persons can avail themselves of loans with this option. Providing proof of income is a great option, even if you are a freelancer or small business owner, or you can even get income from other ways like rent or stock marketing. Below are a few documents that can help you prove your income capability.
1. Pay slip from the employer, if you are a salaried person
2. A bank statement that shows your cash inflow
3. Income tax return statement to prove your income
While applying for a loan, provide a copy of your income proof so that it becomes easier for the lender to make a decision. Proving your payment capability has another benefit. If the lender is satisfied, you will be lucky enough to avail yourself of a loan at lower interest rates or with a longer tenure.
If you have a friend or relative who has a steady income or a fairly good CIBIL score and is ready to support your financial needs, you can apply for a loan with your friend as a guarantor. In the case of joint loans, lenders will look up both applicants' CIBIL score or income reliability. So, if your co-applicant has a good credit score and you’re looking ways on how to get loan with low CIBIL score, then your loan application process will become a breeze.
Applying for a loan by pledging a valuable asset is a fool-proof way to get the loan sanctioned easily and without much delay. If you have any valuable assets like a vehicle, property, gold, or anything of high value, you can offer them as security against your loan amount. With an asset as a surety, lenders will be ready to lend the amount as they are risk-free in lending the loan. They can seize the collateral asset if you don't repay the sum. If you are looking for financial support or how to get loan without CIBIL score for buying a valuable asset like property or vehicle, you can use the same asset as a security to get things done. Apply for a Smaller Amount
If you are not fortunate enough to prove your income, find a guarantor or have any valuable asset to secure your loan, then no worries, you still have the chance to get the loan approved. You can avail yourself of a loan for smaller amounts and shorter tenures to prove your creditworthiness and then access more considerable loan sums. Since the amount is small, lenders will not hesitate to lend the loan even if you have less income. But opt for an appropriate loan amount that fits your budget. By repaying the amount promptly without any delay, you can prove your creditworthiness and then apply for a loan upgrade if applicable or opt for a second loan. As you have already proved your creditworthiness by timely payments, lenders will be willing to offer you a second loan. This would also increase your credit score.
Securing a loan with a good CIBIL score is an easy task. However, getting a loan for your financial emergencies may be challenging and frustrating if you're new to credit and have zero credit score. Even though it is a complex and time-consuming process, it is a possible mission. Try one of the abovementioned methods to get your loan sanctioned even without a credit score. Simultaneously, try to improve your credit score by following the tips mentioned earlier so you will be ready to access any credit-based financial products in the future to enhance your lifestyle.
Read More: How Much Cibil Score is Good?
Why is my CIBIL score zero?
Your CIBIL score is calculated based on your credit history, such as your payments, credit card usage, and credit length. If you have never made a credit purchase, then there will be no credit history, and hence, the credit score cannot be calculated, which results in zero credit score or no CIBIL score.
Does a zero credit score mean I have made some financial mistakes in the past?
There is no fault in having a zero CIBIL score; it just means that you're a newbie to credit purchases. However, lenders may reject your loan applications, delay your loan sanctioning process, or increase the interest rate as they have no proof of your creditworthiness.
How to get loan with low CIBIL score?
You can opt for secured credit cards or the “Buy Now Pay Later” option and make prompt payments to build your credit score. But getting a decent credit score will take time, probably a few months to years.
Should I take steps to improve my CIBIL score even if the bank has approved the loan?
Even though you have taken out a loan to meet your financial needs now, it is always advisable to have a good credit score, as it will help you be ready to seek credit-based financial support from banks and financial institutions when an emergency occurs.
Will my currently approved loan be affected if I don't take steps to improve my score?
No. Once disbursed, your loan amount, tenure and interest rate will not be altered based on your latest credit score. So, an improvement in your credit score will not do any favour for a disbursed loan.
What are the consequences of a zero CIBIL score?
As the lenders don't have an option to access your creditworthiness, you may have difficulty getting loans and credit cards approved. On the other hand, even if your loan gets approved, it may have a higher interest rate or a low tenure. Also, with a zero credit score, you may have limited access to financial products.
I had credit cards a few years back and had made prompt payments. But now I have a no credit score. Why is that?
Banks, lenders and financial institutions will send feedback about your credit payment details more frequently to the credit bureau, mostly every month. So if your credit card has been inactive for so long, especially if it has been more than 36 months, then you may have a chance to get no credit score as there will be no recent credit details about you.
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