Getting approved for online loans with a low credit score is indeed a challenge. Sometimes, your application may get rejected due to your credit history. If you have had a low CIBIL score and you want to correct it, then you must know the options to improve your credit score and then get approval for a personal loan from a bank.
Let’s see what causes a serious drop in CIBIL Score and the ways to improve it.
Multiple outstanding loan payments
Lenders will always look into your financial history before approving your online loans. If you have a low credit score with multiple ouLow credit scoretstanding payments or debts, your personal loan application will eventually be rejected by the bank.
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High credit usage
If you are using more than 75% of your credit limit, it will have a negative effect on your CIBIL score. Make sure to keep a check on your spends and also be mindful while handling multiple loans at the same time.
Applying for loans even after being rejected
If you keep on applying for a loan even after getting rejected , it will not help your financial history. A rejected loan application is recorded in your CIBIL report. So, when you approach a new lender again for a new loan, they will see this information and your low score, and will reject the application again.
Here are a few steps to improve online loans approval & low credit score
Check your credit report
Checking credit report will tell you where your CIBIL score is going down and how it is affecting you. Moreover, examining it periodically helps you see the information feeded in it, thus giving you a possibility to fix your low credit score. It is vital to correct the mistakes committed while borrowing to improve your credit score. This will eventually help in getting easy approvals for all personal loans.
Do not delay or miss payments
Make sure you play your loan EMIs or credit card bills on time, as this directly affects your CIBIL score. Late payments or missing your due dates will lower your credit score exponentially.
Avoid applying for multiple loans at a time
If you have multiple loans from various banks, then consolidate them. Having multiple loans at a time is one of the main reasons for your lower credit score. Try and clear all debts and take one loan to cover your emergencies.
Limit utilisation of credit card
Using multiple loans and reaching the credit limit every time will also lower your CIBIL score. Make sure that you are not only paying the minimum due but also clearing the entire outstanding debt. This will help to improve your credit score.
Following all the above-mentioned suggestions will reap results, but it is important to know that improving credit score is not an overnight process. It will take at least a few months to see the improvement in your credit report.
Source: Tax Guru