Personal loan is one of the easiest loan an individual can get. Although the interest rate is very high it is still required to fulfill the money requirement for multiple uses such as marriage, buying electronic equipment’s and many others.

Few reasons why personal loan is easy to get are:

• Documents required are less
• No collateral needed
• Low annual income required

Although personal loan applications are processed withing a day or less but there are many reasons for the loan application denial such as:

1. Income criteria not met: Application of an individual with a very low income can get denied if his/her annual income is below the bank’s requirement. This is because your income helps banks in deciding whether repayment capacity is good or not. Check out personal loan for low income individuals.
2. Job status/stability: If you are a frequent job switcher or have a temporary job then also you loan can get denied.
3. Inaccurate or insufficient details: While applying for a loan, if you falsify details such as incorrect income or provide incomplete documents then chances of loan rejection increases.
4. CIBIL Defaulter: There are many other reasons for the personal loan rejections but the most common is when the applicant is a CIBIL defaulter. This means that such a person has previously defaulted the loan or credit card repayment or delayed the EMI or have too many payments balance resulting in a low CIBIL score. And such individuals are categorized as CIBIL defaulters by credit institutions (such as banks, financial institutions where you apply for the loan) and personal loan (or any type of loan or credit card) application are straight away rejected by the credit lenders. Your CIBIL score shows whether you are credit worthy or not. And a low CIBIL score means you are likely to default payment in the future.

So the question arises whether personal loan for CIBIL defaulter is possible or not?

Answer is YES and here’s how to get the loan:

1. Opt for secured personal loan: You can keep your assets, fixed deposits, equities, gold as collateral with the bank. And they will offer you the loan without even checking your CIBIL score.
2. Show your high salary: There might be chances that previously due to money constraints you had defaulted the payment. But now your income is very high. You can discuss this with the bank. They will verify your annual income proof and grant you a loan.
3. Get loan in the name of another person in your family having a good CIBIL score: For e.g. if your wife had taken any loan in the past and has a good repayment history with a good CIBIL score then get a loan on her name.
4. Get a loan from private companies: Many organizations also offer personal loan without verifying your CIBIL score. But in return they charge very high interest rate. So this is another way to get a personal loan.

Other lesser known option is PTPL companies i.e. peer to peer lending companies. They do not solely rely on CIBIL rating of the applicant.

What to do after a CIBIL defaulter gets personal loan?

Benefits after getting a personal loan: Once loan is granted, on-time EMI payment can help in rebuilding your credit score and help in removing the defaulter status. Lender will then report your repayment history to the CIBIL. And if you’ve done timely payments without even a single miss, chances of CIBIL re-evaluating your score from bad to good automatically increase. Check out tips on improving CIBIL score.

Remember that interest rate on any type of loan earns banks high profit. So banks can provide loan to every person and increase their profits. But default payment gives rise to non-performing assets which is loss making for them. And this is the reason why member bank first gets credit information report of every applicant from CIBIL to check whether the person is credit worthy or not. So make sure you get credit report from CIBIL before applying for any type of loan or credit card.