CIBIL score as popularly monographed online is a metric of your debt payback proclivity. It was introduced so that lenders have a fair assessment of the risk-to-reward ratio they are undertaking when lending to a potential debtor. The higher the score, the more favourable the ratio is. The CIBIL score doesn’t judge a person’s character; it applies equally to everyone, whether they are very kind or very cunning, it depends solely on your past credit discipline. Hence it goes without saying that the maintenance of a healthy credit score is imperative to secure loans with lenient payback terms. The ideals of healthy credit encompass a CIBIL score above 700 and a low credit utilization ratio, among others. However, circumstantially if you have a low credit score, there are still a lot of maneuvers you can implement to secure a favorable loan.
Understanding CIBIL Score
As mentioned, your CIBIL score estimates your creditworthiness. It is a three-digit number that establishes your inclination towards timely payments. It is usually construed from numerous factors such as timely payments, credit utilization, and the number of loan inquiries undertaken at the same time. If you have optimally performed in each of these metrics, then your credit score will be desirable. Generally, a score of 700 and above is presumptuous of responsible credit behaviour, and if your score falls substantially below this threshold then securing loans with digestible terms might prove to be challenging. If you have a CIBIL score of 550 or thereabouts then you fall into this category. Trying for loans through the traditional route might not be the best option for you then.
Factors responsible for a low credit score
If you have a sub-par credit score, then you may have a few fallacies in your credit history that require your redressal. The most important of these would be untimely payments. If you have consistently defaulted in making your repayments your time, then your credit score takes a major lick. So, it becomes paramount that you brush up on your payment punctuality. When you become the recipient of a credit card, you are assigned a credit limit. This limit is there to curb your spending to a stipulated limit. However, it is always advised to spend substantially less than the assigned limit. A high credit utilization ratio will adversely affect your credit score. Lastly, it is far from prudent to engage in multiple loan inquiries simultaneously. This paints a discouraging picture to future creditors who may be put off by your incessant loan queries.
Challenges in securing a loan with a CIBIL score of 550
As hitherto stated, a loan with a CIBIL score of 550 is far from ideal. Securing loans in the first place will prove to be arduous, let alone getting one with favourable terms. This will be especially true if you approach orthodox lending institutions like banks. If you do manage to secure a loan, it will likely be one with a steeper interest and a shorter tenure, resulting in elevated EMIs. Your best bet in these situations would be to consider NBFCs as they consider providing loans to people with a low CIBIL score and their USP.
Improve your chances of getting a loan with a low CIBIL
If you don’t believe in NBFCs then your chances of getting a loan with a score of 550 are slim. Your best bet then is to go for secured loans, which are loans requiring the submission of collateral. This can prove to be a risky gamble as failure in repayment will lead to the loss of that asset. Additionally, in most cases, the collateralized asset is worth more than the loan value, hence you stand to lose a lot more than you can gain.
If secured loans are not an option for you, then you may need to bring a co-signee on board. This signee must have a healthy credit score so that some of the qualms of the lender are appeased. If you want to be the sole bearer of the loan, then you must have an unwavering source of income with irrefutable proof of stability. It will also help to have multiple income sources, which will help the creditor be at more ease.
How to apply for a personal loan with PayMe
With PayMe leading the charge in the emergence of NBFCs, it has never been easier to secure a loan with a sub-par credit score.
- Step 1: Navigate to the official PayMe website.
- Step 2: Browse to the products section and select the personal loan option.
- Step 3: Provide your mobile number for security purposes.
- Step 4: Enter the OTP sent to your mobile number.
- Step 5: Complete the application process by following the on-screen instructions.
- Step 6: Ensure you have at least one government-approved ID and relevant bank records for verification.
- Step 7: Upon approval, your loan amount will be credited to your account within 24 hours.
How To Improve your Credit Score if it’s just 550?
If your credit score is currently at 550 and you’re finding it difficult to avail of loan solutions, don’t worry—PayMe’s Credit Assist is here to help. For just ₹59, you can get your hand on personalized solutions designed to improve your CIBIL score within a few months. With our seamless service, you’ll get tailored CIBIL reports that highlight exactly what you need to do and how you need to move forward to enhance your score. A higher score means better interest rates and faster approval for the loan you need. Take control of your financial future with PayMe’s Credit Assist today!
Conclusion
Navigating the financial landscape with a CIBIL score of only 550 can be a daunting task, but it’s doable. By understanding the factors that affect your credit score and taking proactive steps to improve it, one can significantly increase their chances of availing favourable loan terms.
PayMe, with its expertise in NBFCs, provides an accessible loan solution for individuals with sub-par credit scores, offering personal loans with minimal hassle. Additionally, PayMe’s Credit Assist service can be an invaluable tool in your journey to boost your credit score, ensuring you gain access to better financial opportunities in the future.
Remember, a low credit score is not the end of the road; with the right strategies and support, you can build a stronger financial foundation and achieve your financial goals.
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