How to Get a Debt Consolidation Loan with a Low CIBIL Score?
Several outstanding dues and credit accounts can cause stress while managing personal finance. This may impact the credit score adversely. Furthermore, the outgoing cost of paying dues can create significant financial obligation if loans are obtained at higher interest rates.
Therefore, availing a debt consolidation loan can assist in managing too many outstanding dues with ease. Debt consolidation helps to reduce the number of credit accounts to one and save expenses on payable amounts towards the interest. This way, individuals can repay the dues faster and achieve financial freedom from the liabilities.
Nonetheless, borrowers should plan their debt consolidation prudently, so the interest cost of the new financing is at its best terms.
Why choose a personal loan for consolidating all debts?
The dues and interest rate on credit cards can be considerably high if the repayment is not regular and organised. Having multiple active credit cards can lead to this problem in no-time. Additionally, a high-interest loan account can also increase the debt burden significantly.
Now, it can be a beneficial proposition to consider a personal loan for debt consolidation. With such loans, the repayment process can be consistent and easy.
One issue that borrowers might face is that financiers prefer to lend personal loans to individuals with a credit score around and above 750. However, they can avail a personal loan with low CIBIL score as well.
Following are some measures to avail personal financing despite a lower credit score –
- Provide documents of higher income
Income is an important determiner of loan eligibility. To reduce the default risk, lenders prefer to provide financial facilities to individuals with a higher income. Thus, if borrowers can provide the financier with proof of a high salary and additional income, they may avail a personal loan with a low CIBIL score.
Any additional income such as steady returns on investments along with a stable salary can work for this measure.
- Opt for a lower loan amount
Applying for a higher advance with poor CIBIL score can reduce the possibility of loan approval. Financial institutions may find it riskier as it increases the chances of default payments. However, a lower debt consolidation loan amount can be approved as it is easier to repay.
- Apply with a guarantor or co-applicant
Applying with a guarantor or co-applicant may also enhance the loan approval possibilities. If the financial profile of such an individual is creditworthy, lenders find the payment default risk lower and can sanction a personal loan.
Thus, applicants should consider a guarantor or co-applicant with a better CIBIL score along with steady and considerable income.
- Check CIBIL report for errors
As the credit score is one of the deciding factors of availing a debt consolidation loan, the credit report needs to be error-free. It may also not also show recent updates.
Even though the possibilities of errors are considerably low, individuals should check your credit report regularly and correct it if required. This can improve the credit score as well as the eligibility of loan application.
Advantages of a debt consolidation loan
Refinancing all active loans and credit card accounts with a single loan can be beneficial in several ways –
- Individuals can manage dues efficiently with a single payment option.
- With the reduced interest rate of a personal loan for debt consolidation, the total debt burden can also come down.
- If planned prudently, borrowers can also save money on paying EMIs and invest in different financial products.
- Debt consolidation can help to repay the loans sooner and increase the CIBIL score potentially.
Nevertheless, while opting for debt consolidation, borrowers should always opt for a reputed financial organisation. NBFCs like Bajaj Finserv provide such loans at affordable interest rates and various benefits.
Also, this financier brings pre-approved offers that help to avail loans quicker via a simplified application process. Several financial products, like business loans, credit cards, etc., come with these offers. Borrowers can check their pre-approved offer by simply entering a few basic details.
Individuals who find it hard to manage several liabilities can consider debt consolidation loans and repay the dues sooner. Even borrowers with lower credit rating can use a personal loan for debt consolidation and improve their credit health.
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