Trying to take a loan with bad/marginal CIBIL score is a nightmare for most borrowers. As their loan application is rejected by Financial Institutions, the CIBIL score gets further impacted resulting in downward spiral.
One gets a “so-called” bad credit due to one or more of the following reasons:
- When a borrower defaults in making any of the repayments.
- When a borrower extensively shops for a loan but gets rejected repeatedly.
- When a borrower has never taken a loan in the past and there is no credit history to validate.
Below is quick guide compiled by LoanKuber to enable borrowers with low Cibil score in getting a mortgage loan.
Tips for loan with a bad CIBIL score:
1. Additional Co–Applicant– By adding an additional creditworthy co-applicant to your loan application, you are giving additional assurance to lending institution.Co- applicant with good credit score will add to the comfort level of lending institution. Suppose, if your spouse has a good credit score, you can make him/her your additional co-applicant.
2. Guarantor for Borderline cases– In many cases wherein CIBIL Score of a borrower is on the borderline i.e. around 650, financial institutions may agree to approve loan. This is only when the borrower provides with a Guarantor with good CIBIL score. The liability of a loan guarantor is same as that of a Loan Borrower.
3. Seek lower LTV (Loan to value): LTV denotes how much of the property value a bank can lend to a borrower. A 80% LTV indicates that the buyer will have to shell out only 20% of the property value and the rest can be financed through banks. If you have bad CIBIL score you can seek lower LTV from lending institutions which will make your application more credit worthy.
Options for loan with a bad CIBIL score:
- Approach Selected Housing Finance Companies (“HFCs )that offer loans to individuals with low CIBIL scores –There are selected HFCs which can provide mortgage loans to the individuals having marginal CIBIL scores. However, their interest rate is quite high and they may take a longer time to process the loan application.
- Private Lenders – In many cities you will find private lenders who are willing to lend i.e. loan without CIBIL score. But one needs to be cautious as private money lenders often require borrowers to sign transfer deed for the property in their favor. There have been cases of private lenders registering property on their names from gullible borrowers. Private lenders also charge excessive interest rates.
- Peer to Peer Lending Platforms- These platforms have sophisticated data driven models to evaluate borrower’s credit worthiness rather than base their decision on Cibil Score only.
At LoanKuber we have developed a proprietary model which enables a wholesome credit assessment and enables us to extend mortgage loans to borrowers with marginal/low credit scores.
While one should strive to maintain a healthy CIBIL score, Loankuber can help you obtain a secure mortgage loan to start rebuilding your credit history.