How to get a Personal loan without hurting your CIBIL score?

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A personal loan is always a funding tool of choice amongst the borrowers due to its many features. The loan is unsecured, can get approved and disbursed instantly, and you can use the loan amount for any end-user of your liking. One of the most crucial and essential eligibility criteria to get a personal loan is a good CIBIL score. Better the CIBIL score better would be the loan deal for the borrower. 

What is a CIBIL score?

Transunion CIBIL is a credit awarding agency that gives its score as a three-digit number. This score ranges from a number between 300 to 900 and is a measure of the borrower’s creditworthiness. The score takes into consideration one’s credit history and due repayment pattern. Every lender considers this score before approving your loan application.

Is the CIBIL score affected by personal loan application?  

The answer is YES. With every loan application; the lender would make a check on your credit score. The frequent reviews on CIBIL affect the score negatively. Multiple credit check indicates numerous applications for a loan which in turn suggests your credit hunger.

Some tips to get a personal loan without hurting your CIBIL score

You would always wish to find the best deal on your loan without damaging your credit score. For this, here are some tips for you to follow. 

  • Avoid approaching multiple lenders or Direct Sales Agents.

The market is overflowing with lenders ready to offer you a lucrative deal for a personal loan application. Each one will offer different interest rates and other loan terms. It is a general mentality of the borrower to approach multiple lenders to know their offers and select the best. But each time you come to a lender, he will make a check on your credit score. This frequent check adversely affects your CIBIL as it suggests some financial crisis at your end.

Instead of approaching the lenders in person, you can use an online personal loan EMI calculator available for free on almost all the lenders’ websites. You can know the offers of the lender and can also decide your pick. Approaching many Direct Sales Agents is also risky as DSAs will forward your loan application to various loan providers, again leading to repeated credit checks. Hence, you must refrain from contacting multiple lenders. 

  • Carry out some backgrounds study about available deals

It would be best to do a bit of market research before you make an actual application for a personal loan. It can save the unnecessary multiple checks on your credit score. You can personally visit the lenders or visit their websites for their offers and decide its suitability to your needs. Online personal loan application and personal loan EMI calculators can help you choose the best deal available for you.

  • Keep in mind your credit profile while selecting the lender.  

You can avail of a personal loan from a bank or an NBFC, depending upon your wish and creditworthiness. Your high CIBIL score can make you eligible for a personal loan from top private or government banks or fintech lenders. But with a credit score which is inclining downwards, you do not stand a chance to get personal loan approval from these top rank lenders. As said earlier, many new entrants in the financial market are eager to make a name and place for their institute. Such lenders would offer you a personal loan despite your low CIBIL score with a slightly higher interest rate. It is better to approach a lender who would not make much ado of your CIBIL score while approving your loan application.

  • Pre-approved loans are better options.

Many banks and financial institutes offer pre-approved loans to their regular customers who have a long-standing association. As the leading institute knows the customer profile and the borrower’s creditworthiness, they do not indulge in an in-depth check into his credit score. Such pre-approved personal loans come with lower interest rates and flexible repayment tenures.

  • Do not cancel the loan after making an application with a lender.

Make your selection of the lender very wisely and logically. Making a loan application to a lender and then cancelling it for a better deal offered by some other lender will make a dent in your credit score and your future dealings with the primary lender. Therefore, it is advisable to make the lender’s selection smartly and after a good deal of homework.

Your credit score is a significant measure of your creditworthiness for personal loan approval. It is because a personal loan is an unsecured loan, and hence the lender considers your CIBIL score as a measure to decide your eligibility for the loan. A better CIBIL score guarantees a better deal on a personal loan.