People in both cities commonly believe that they are unable to obtain a personal loan due to a low credit score, despite the fact that this is not the case. However, the reality is not like that.
To assist you in receiving a personal loan despite your credit history, here are some pointers in addition to knowing how to get an ICICI personal loan:
Reduce your loan amount requirement if possible
When considering whether or not to provide you with a personal loan, lenders will consider more than just your credit history. They will also consider your monthly income and the amount of debt you currently have. Then, the lender determines the maximum loanable amount based on the applicant’s credit score and the lender’s risk estimate of the ICICI personal loan payment. Getting a loan for a smaller amount tends to reduce the credit risk for the lender, making it more likely that you will be approved even if you have a low or no credit score. This is due to the fact that applicants with bad credit, as shown by a free credit report, are often seen to be less reputable. Therefore, applying for and receiving a personal loan for a lower sum may boost your chances of approval.
Add a co-applicant to the loop.
If you’re attempting to figure out how to get an ICICI personal loan, it’s important to keep in mind that if the lender has any doubts about your ability to make ICICI personal loan payment, they may ask for a guarantee or co-applicant. Having a poor credit score can make it difficult to qualify for a loan, but having a co-applicant or guarantor who has a good credit score and sufficient income can enhance your chances of being approved. Lenders are more likely to grant loans when additional security in the form of a co-applicant or guarantor is offered. Keep in mind that if you add a co-applicant or guarantor to your personal loan, your failure to make timely payments will affect not just your credit but also that of the other individual.
When traditional financial institutions are unhelpful, alternative financial service providers and financial technology should be considered.
Financial institutions like NBFCs and fintech tend to have less stringent criteria when considering Personal loan applications as compared to traditional banks, which would still refuse your loan regardless of the actions you take to increase your chances of being approved for an ICICI personal loan. This makes it simpler for those who were denied a bank loan to obtain one from a non-bank lender. If you need a loan but don’t have a high credit score, an NBFC may be a better option than a traditional bank. Personal loans from NBFCs have better approval rates than those from banks. Keep in mind, though, that NBFCs and Fintechs typically have higher interest rates than traditional banks.
You should accept a higher interest rate for an initial period.
The free credit report’s purpose has expanded beyond only determining eligibility for an ICICI personal Loan as the importance of a high credit score grows. Loan interest rates are increasingly being tied to applicants’ creditworthiness. Therefore, those with poor credit will be charged a higher interest rate on their individual loans. Paying a higher interest rate is preferable to be rejected repeatedly by lenders who would otherwise not provide negative credit borrowers with any money.
You should look around at the various loan options available to you before committing to one with a high interest rate, depending on your credit history, income, and other factors. When determining the EMI for the personal loan, make sure that your total debt payments (including the new EMI) do not exceed 50% to 60% of your gross monthly income. You can reduce your monthly payments by stretching out the loan’s term, but you’ll end up paying more in interest over time.
Other things to keep in mind
If you want to improve your credit score after getting a personal loan and don’t know what can hurt it, then ensure to make timely ICICI personal loan payments after the loan is given. Once your credit history has improved sufficiently, you can shop around for a new loan provider that can offer you better rates and terms. A “balance transfer” describes this scenario. Since the balance transfer is viewed as a new loan application by the new lender, you should make sure the amount you would save on interest is sufficient to justify the costs, such as the processing fee and administrative fees.
If you’ve learned how to secure a personal loan despite your low credit score, it’s only prudent to take the actions necessary to raise that score as well. Improving your credit score is a great first step in bettering your financial future.
First, it’s important to keep in mind that a negative entry on your free credit report can lower your credit score if you fail to pay your credit card bill or loan EMI on time or skip ICICI personal loan payment. So, always make your EMI payments on schedule and in full. You can increase your future access to personal loans by doing this, as it will help you develop or improve your credit rating over time.
Next, it’s important to remember that keeping your CUR below 30% is one of the most critical things credit card holders can do to maintain or increase their credit score when applying for a personal loan. The percentage of your credit card’s available credit that you have actually used. If your credit utilisation ratio is over 30%, the credit bureaus will likely reduce your score because this is seen as a sign of financial distress by lenders.
Ask your credit card company for a higher limit, or look into getting a new card altogether if you frequently find yourself in this situation. As a result, you’ll have more available credit and a lower credit utilisation ratio. This will assist in lowering and also maintaining below thirty percent ratio for credit utilisation, hence helping your cibil score too.