Personal Loan for Low CIBIL Score of 500

A personal loan is a type of unsecured loan. Unlike other types of loans, one can obtain the necessary funds without pledging any of your assets as collateral or security. Thus, lenders thoroughly assess your repayment capabilities and creditworthiness before approving your loan application. In such cases, your credit score is the first thing they usually consider, as it reflects how well you have managed your past loans and credit card payments. A CIBIL score of 500 or below is considered very poor and can severely affect your chances of getting approved. However, it doesn’t mean no option is available for those with a lower credit score. Let’s scroll down to learn more. Hereunder, we present a detailed overview of getting approved for a Personal Loan with a CIBIL Score of 500.

How to Get a Personal Loan With a CIBIL Score of 500?

The following are certain tips you can keep in mind to get a Personal Loan for CIBIL Score 500:

• Showcase all your income sources
• Apply with co-applicants 
• Settled your existing debts
• Apply for a lower loan amount
• Opt for a longer repayment period

Personal Loan Options for a CIBIL Score of 500

The following are certain possible options regarding a personal loan for a CIBIL score of 500:

Apply With a Guarantor: A guarantor is someone who agrees to repay the loan in case you default. Having a guarantor with a good credit score and a steady income can enrich the possibility of getting a personal loan with a low CIBIL score. 

Apply With a Co-applicant: A co-applicant is an individual who submits a loan application alongside you and shares the responsibility of repaying it. A co-applicant can be your spouse, parent, sibling, or friend. A co-applicant with a good credit score and a stable income can improve your eligibility and loan terms.

Apply for a Secured Loan: A secured loan is a loan that requires you to pledge an asset, such as your property, vehicle, gold, or fixed deposit, as collateral. This reduces the risk for the lender and makes them more willing to lend you money even if you have a low CIBIL score. 

Apply for a Peer-To-Peer Loan: A peer-to-peer loan facilitates borrowing funds through an online platform connecting borrowers and lenders directly. This eliminates the need for intermediaries, such as banks or NBFCs, and allows you to negotiate the interest rates and terms with the lender.

Eligibility Criteria for Low Credit Score 500

The following are the typical eligibility criteria regarding a Credit Score of 500 for a personal loan:

• The applicant must be between 21 and 60 years old.
• Applicant must be a salaried or self-employed individual.
• Applicant must demonstrate a regular and stable income source covering the EMIs.
• Applicant must be an Indian citizen.

Documents Required for Personal Loan for Low CIBIL 500

The following are the required documents regarding a CIBIL Score 500 for a personal loan:

• Proof of Identity: PAN Card, Passport, Voter ID or Driving License.
• Proof of Address: Utility Bills, Passport, Driving License, or Aadhaar Card.
• Proof of Income: Bank statement, salary slip, tax return, or income certificate.
• Proof of Employment: A formal letter from your employer or documentation affirming your business ownership.

Challenges With a CIBIL Score of 500

The following are the major challenges of having a low CIBIL score of 500:

• Difficulty in getting loan approval
• Available limited credit options
• Higher interest rates and unfavourable terms
• Potential impact on future credit score

What Are the Factors for a Low Credit Score?

Here  are the applicable factors for a low credit score:

• Payment History: Missing or delaying your loan or credit card payments can have a negative impact on your credit score, as it shows that you are not reliable in repaying your debts.
• Credit Utilisation: Using too much of your available credit can lower your credit score, indicating that you are overburdened with debt and may have difficulty repaying it. 
• New Credit: Applying for multiple new credits in a short span of time can lower your credit score, as it suggests that you require credit and may pose a higher risk of default.

How to Improve Your CIBIL Score Above 500?

Here are the certain tips you can follow to improve your CIBIL Score above 500:

• Pay your bills on time
• Settle your outstanding dues
• Lower your credit card utilisation  
• Avoid multiple loan applications
• Keep your old bank accounts open
• Check your credit report regularly 

How to Apply for a Low CIBIL Personal Loan From Urban Money

To apply Personal Loan for CIBIL Score 500, you can simply follow the steps given below:

• Visit the official website of Urban Money.
• Click on the “hamburger menu” icon.
• Choose the “Loan” option and then the “Personal Loan” option.
• You will be directed to a new page titled “Personal Loan,” where you can review an array of leading lenders.
• Locate the one you want to apply for and click the “Enquire Now” button.
• A small digital form will display on your screen; fill in the required information and submit.
• Upon submission, a 6-digit OTP will be sent to your mobile number.
• Enter the OTP and click the “Submit” button.
• Within a day, a representative from Urban Money will contact you and guide you until the loan amount is credited to your bank account.