Disadvantages of Having a Low CIBIL Score in India

In India, if you have a low CIBIL score then there are a lot of disadvantages that you might have to face. Similarly, a low CIBIL Score has a number of disadvantages, including the risk that your loan application may be denied immediately, that you will have to wait longer than normal, that additional documents will be required, and that you will have to pay a higher interest rate on your loan. A low Credit score affects you in a variety of ways, whether you realize it or not. Many times, your CIBIL score is low due to bad repayment practices or an issue with your credit report that you are unaware of. As a result, it is recommended that you check your credit report on a regular basis to ensure that there are no errors.

Disadvantages of Low CIBIL Score

Rejection of Loans

When you apply for a loan, one of the first and most important factors considered is your CIBIL Score. Of course, additional criteria such as your salary, previous debts you’re paying down, and work status are considered when applying for a Home Loan. However, when you apply for a personal loan or a credit card, your CIBIL score is one of the primary variables that determines whether or not your loan application is approved. Receiving a personal loan rejection letter can be difficult because personal loans are typically requested in times of extreme financial need. Receiving a loan rejection during a difficult moment can be painful. Rejection for a credit card, on the other hand, can drop your CIBIL score even worse. Your CIBIL Score, on the other hand, is seen as a direct indicator of your creditworthiness. It also displays your likelihood of repaying the loan. As a result, no lender will be willing to lend to someone with a poor credit history.

Increased Interest Rates

While some banks may just refuse you, others may be willing to lend to you despite your poor CIBIL score. They may agree to lend at a higher interest rate to compensate for the higher risk of lending to you. Whereas, on the other hand if you have a good CIBIL score you are more likely to acquire an affordable rate of interest on your loan application along with rapid approvals.

High Monthly Repayments

While some lenders may offer you a loan with a higher interest rate, others may offer you a loan with terms that are less favorable to you like higher monthly repayments or lesser approved loan amounts. For example, the amount of the loan that has been granted may be significantly less than what you originally demanded or applied for, or a shorter loan tenure may be permitted. A shorter loan tenure with the same loan amount would result in higher EMIs. Other than that, it’s possible that your loan will require a greater down payment to be approved.

No Loan Top ups

Even if you are able to secure any kind of loan, it would be difficult for you to have a loan top up. Banks consider your CIBIL score while approving a loan top up request and you might face difficulty in getting approval on your loan top up application. 

Moreover, these are the key downsides of having a low CIBIL Score. Aside from this, there are a number of other disadvantages that may differ from one lender to the next. However, there are few steps on how to improve CIBIL score to avoid such disadvantages. It is critical to maintain a decent CIBIL score before applying for a loan or credit card.

The post Disadvantages of Having a Low CIBIL Score in India appeared first on VOICENDO.

Brainwave Canal