A good credit score makes the whole process of getting a loan easier. On the other hand, bad credit history means you’ll either pay higher interest rates, make larger down payments, or be forced to put up your valuables as collateral. Various lending institutions provide personal loans at a very competitive interest rate. In most cases, it is much cheaper to repay a personal loan than your student loan. Also, the tenor of a student loan is typically 15-20 years, while the tenor for a personal loan is much shorter, going up to a maximum of 5 years.
To get a personal loan with no credit, you need someone to stand as a guarantor or co signer of the loan. You, being a student, are not deemed eligible to avail the loan on your own. You must ask one of your family members to share the liability with you. When you start earning after graduation, you may feel obliged to release the cosigner of their liabilities as soon as you can.
- Improve Your Credit Score
Your credit score will impact the terms and conditions you qualify for, such as loan amounts and interest rates charged on loan. If you have a bad credit loan, the lender will likely charge a higher interest rate and may be issued for a lower amount. To improve a bad score, you can start paying down debts on time, reviewing your credit reports for errors, challenging any mistakes you find and limiting the number of hard credit inquiries on your credit history until your score improves.
- Gather Other Financial Details
Gather information on your income and monthly expenses. Looking through this documentation will help you get a better sense of your repayment capability and the loan amount you need to avail and will make the process faster once you are ready to apply.
- Get in contact with your Lender.
After reviewing your CIBIL score and credit report, research the minimum credit score requirements that lenders look for. Your bank or credit union that you currently have an account with has an understanding of your financial profile, consider asking the lender on how to avail a loan. You may also want to inquire about the eligibility criteria to see if your credit score would qualify you for a personal loan.
- Prove You Can Pay the Loan Back
Lenders want to know that you are capable of repaying the loan amount in full, including any interest accrued. Before applying for a loan, you need to make sure a loan will fit into your budget. Thus, the amount they grow to you often depends on your ability to repay them. If the borrower defaults on repayments, then the creditor turns to the cosigner to collect the loan money. Cosigners should have a good credit score and history, and to get a loan approved, they may need to provide the creditor with proof of income as well.
- Shop Around for Lenders and Consider Loan Types
It’s a good idea to apply for loans from a lender you trust, and that has lending standards you feel confident you can meet. Remember, loans for people with bad credit might have higher interest rates or be capped at a lower amount because lenders are more cautious with these loans.
How to check credit score?
TransUnion CIBIL receives information of its loans and credit cards from all banks and NBFCs operating in India which is then used to generate the CIBIL credit report and CIBIL Score. Based on the credit report, the lenders analyze the credit history and determine his/her creditworthiness for new loans/credit cards. To check your CIBIL score, you can follow the steps mentioned below:
- Visit the CIBIL score website at www.CIBIL.com/freeCIBILscore
- Click on ‘Get Yours Now’.
- Create your account by entering your personal information like your email id, full name, date of birth, etc.
- In the ‘ID Type’ section, select ‘Income Tax ID Number (PAN)’ and enter the ID number.
- Click on ‘Accept & Continue’ and within 24 hours you will receive your free credit report and score in your inbox.