How To Get Education Loan With A Low CIBIL Score – Experts Guide

December 15, 2020

How To Get Education Loan With A Low CIBIL Score – Experts Guide

Everyone wants a good education, and sometimes a person has to borrow money to get a good education because they would not be able to afford the education themselves. The process of taking an education loan in India is a tough one. Most banks have rational interest rates on education loans. It is tough to get student loan with bad credit score. To get a decent education loan, your education loan cibil score should be high

Education loan cibil score

CIBIL (Credit Information Bureau India Limited) is India’s first Credit Information Company. All banks and financial institutions in the country are required to send an individual’s credit card and loan history to CIBIL each month. CIBIL then gathers and preserves the Credit Information Report (CIR) to generate a credit score. CIBIL Credit Score or education loan CIBIL Score is a three-digit number that can have any value between 300 and 900. This value is measured on the basis of the data in the CIR of an individual and is a measure of his or her creditworthiness. During the loan appraisal process, the lenders use this ranking. A higher score shows that the person is more likely to repay the loan on time, thus raising the chances of getting the loan. A lower-ranking, on the other hand, decreases the chances of getting the loan.  To get an education loan with low CIBIL score is tricky but not impossible.

How is the CIBIL score determined?

From the moment their accounts are operational, CIBIL records the financial information of all individuals keeping a PAN card or a savings account with any bank operating in India. Both credit card purchases and online cash transactions carried out by these individuals also contain this. It is often shown that the education loan CIBIL score of individuals who do not hold a credit card or those who have one but have never used it for any of their purchases is negative or their score is shown to be zero. This is considered a very good consideration by most banks when they take the CIBIL score of the loan applicants for any form of loan. CIBIL ratings are between 300 and a high of 900.  CIBIL ratings are between 300 and a high of 900. The higher the CIBIL ranking, the better your chances of getting a loan for education are and vice versa- the lower the CIBIL ranking, the more difficult it is to get loan for low CIBIL score.

Education loan cibil score

In India, there are mainly two kinds of educational loans. Secured loans from all major government banks for education and unsecured loans from private financial organisations called NBFCs (Non Banking Finance Companies) for education. For both types of lenders, the education loan CIBIL score criterion is distinct.

CIBIL Score requirement of government banks

Government banks such as the SBI, Bank of Baroda, Punjab National Bank, etc. provide loan applicants with a CIBIL score of 650 and above with secured education loans. It is mandatory for loan applicants and their co-applicants to have a CIBIL score of 650 and above to get an overseas education loan from SBI, which is one of the most popular government banks operating in India.

NBFCs CIBIL Score Criteria

The CIBIL score of the borrower and their co-applicants is one of the most significant factors considered by NBFCs and private banks before approving any education loan application. Most NBFCs that operate in India need a CIBIL score above 700 for loan applicants as well as their co-applicants. For students who wish to borrow overseas education loans, the following CIBIL score limits are recommended.

300-599: If your CIBIL score falls below this range, it is high time to review your financial records and take care of any crucial problems that can cause your CIBIL score to be so poor.  Most financial institutions consider a CIBIL score below 600 to be really poor, so the chances of you having an education loan or student loan with low cibil score are smaller.

600-749: People whose CIBIL score comes in this category can still get an education loan. However, you need to bear in mind that most banks and NBFCs are very strict about loan applicants meeting the education loan CIBIL score criteria when it comes to having an education loan, due to the huge percentage of education loans being reported as NPAs last year.

750 & above: As their scores suggest a healthy financial record, individuals with a CIBIL score of 750 and above will not face any trouble getting an overseas education loan. This CIBIL score is also helpful for lenders in assessing the person and their co-financial applicant’s reliability.

Do reach out to UniCreds in order to understand the CIBIL score criteria and also to know if your profile will be deemed suitable for an education loan. Given the daunting nature of their profile, our financial officers have helped several candidates get an education loan and we will be able to do the same in your case too, even if you are seeking a loan for low cibil score.

Tips to get a loan with a low CIBIL Score

1. Show timely repayment records on current bills

CIBIL score depends on repaying the current debts in a timely manner. Ensure having a record of timely payments on all the unpaid debts, such as credit cards, EMIs, and utility bills, before applying for a loan. This will help in building a higher credit score and improve the chances of approval so you can avoid getting rejected on your student loan with bad credit score.

2. Present proof of income to sustain the ability to repay loans

Other variables, such as current salary or income streams, are considered by most lenders, along with credit score. Someone with a poor credit rating will also provide evidence of an increase in salaries, annual bonuses, or other additional sources of income in bank statements. This proves that the person is adequately financially stable to repay the loan on time.

3. Request for a loan from the NBFC

It is best not to apply for a loan from a bank because each assessment of the loan application is accompanied by the review of the credit report that results in hard investigations when someone has a bad credit score. Since they tend to have more relaxed policies against clients with poor credit ratings, it’s easier to apply for a loan from an NBFC. A significant thing to remember here, however, is that the interest rate paid by NBFCs is higher.

4. Opt for a low sum for personal loans

The lender may consider an individual as a risky client if he borrows a huge amount of money with a low credit score. So to produce a better credit score, he should opt for a lower sum and repay it annually. This will gain the trust of the lender in his creditworthiness, and he can go back for a higher sum of the loan. . Repayment of a smaller amount would also be easier on the wallet, lessening the struggles of getting a student loan with low cibil score.

5. Get a guarantor or request a joint loan

Even if someone has a low education loan CIBIL score or is new to credit, with a co-applicant or a guarantor, he will get approved for a loan quicker. The lender would be more likely to assist with a better offer on the loan sum if the guarantor has a decent credit history and a high credit score.

6. Request a Secured Loan

Another simple way to guarantee the loan repayment is to apply against any collateral, which may be against collateral such as gold or private property/other valuable properties.

When applying for a mortgage-backed loan, there are several banks and financial institutions that readily offer loans to low credit score holders. In general, properties such as land, gold, fixed deposits, etc., are approved by lenders as collateral to disburse a secured loan even to low CIBIL score applicants.

7. Resolving Credit Report Errors

There are also real instances where mistakes or misreporting on the credit report have occurred. Keep the education loan CIBIL score reviewed once every six months to ensure that such errors do not occur and that the credit report is revised so that you don’t have to get loan for low cibil score.We hope this article helped you to understand how to go about seeking an education loan with low cibil score.

FAQs

1. Is your CIBIL score required for a student loan?

The CIBIL score of an applicant and their co-applicants is one of the most significant aspects considered by NBFCs and private banks prior to actually approving any education loan application. The majority of NBFCs in India require loan applicants and co-applicants to have a CIBIL score of at least 700.

2. What is the minimum CIBIL score for an education loan?

The score can range between 1 and 999. However, the ideal CIBIL score for obtaining an education is 750 or higher. Loan approval would be difficult for applicants with a CIBIL score of less than 600.

3. Is 550 a good CIBIL score?

A CIBIL score of 750 or higher qualifies you for almost any type of loan. A personal loan with a CIBIL score of 550 or even less, on the other hand, may result in rejection or a higher interest rate because you are considered a ‘high-risk’ borrower, based on the lender’s policy.

4. Which banks give education loans without the CIBIL check?

Most banks offer students reasonable interest rates on education loans if they have a strong CIBIL score. A person with a poor CIBIL score will find it challenging to obtain an education loan from his or her bank.


ShreyaWitten by Shreya Shreya has expertise in writing engaging content for the readers and has a deep interest in unique applications of technology in various domains. She has worked closely on projects with Neil Patel Digital, Hindustan Times, News 18 and Shiksha.
Twitter, Facebook, Instagram

imageimage