Rejected for loan due to bad Cibil score? Here are your other options

A bad Cibil score can limit your borrowing options. Kaushik Gowda, a Noida-based techie, was in for a rude shock when his home loan application was rejected by a leading Housing Finance Company (HFC). When he pulled out his personalized credit score, he discovered that it was a pathetically low score of 535. But that did not dampen his spirit. Despite lot of discrepancies in his credit score, he went ahead with strong support from his wife who had a healthy score of 790.

“Apart from starting the application process with the concerned bank, I also worked on removing the derogatory information on my credit file and many credit cards against my name weren’t held by me. Thankfully, my wife’s score was good and she had a good history, so we went to the bank and told the manager honestly about our case and requested him to consider our application and he obliged. We are waiting for the sanction letter now,” said Gowda.

However, there are other ways also to get a loan if you have a bad credit score:

Check your spouse’s score: If you are married and your better half has a better credit score, he/she help you out. Get your spouse to be a joint loan holder in that case.

Look for HFCs who offer loans to lower credit score: There are companies that offer loan to people with bad credit score. They may offer it to you at higher interest rate, but it is worth trying. In the long run, it would help you in building credit score. May be in a couple of years’ time, you could transfer your loan to lower interest rates, by then your credit score would have improved drastically.

Peer-to-peer lending: It is a widely established practice abroad. The concept is slowly picking up in India. The interest rates are a tad higher than the market rates and the loan size may be smaller, but there is an option.

Family banks: You will love India for its closely-knit families even more, if you know that many families across the country have a family bank. The members and customers of such banks are families themselves. In some cases, an outsider can get a loan with the guarantee and approval of a member.

Collateral loans: There are many such products available: loan against shares and securities, loan against FDs, gold loan and many others. Banks don’t really go digging into your credit history for such products.

(About the author: Rajiv Raj is the director and co-founder ofwww.creditvidya.com.)

(Image: Thinkstock)