If you dont have a credit score, these can be options to secure a personal loan
Credit scores have emerged as the touchstone in modern credit ecosystem with all lenders -- banks and NBFCs -- depending on credit scores to judge the creditworthiness of an individual.
Kolkata: Credit score has become a financial lifeline in modern times. It has become crucial since all lending institutions, almost instinctively, turn to it when faced with an application for a loan. The level of credit score determines the applicant's ability to access loans and credit cards and also helps set the rates of interest and repayment terms that accompany a loan. If the score is higher, the rate of interest is relatively less while lenders tend to charge higher when the score is lower that signals lower creditworthiness.
While a high credit score helps an applicant secure favourable terms, what happens when an individual does not have a credit score at all. It could happen since an individual with no credit history will have no credit score at all. It can happen if the person has never taken a loan or does not have a credit card. So what can happen if such a person needs to raise a personal loan in an emergency? What are the potential sources from where he/she can raise money? In such an instance one can explore the following options:
Taking help of a co-applicant: If a person without a credit history applies for a personal loan with someone who has a good credit score as a co-applicant, the chances of securing the loan goes up considerably. Even the lending institution can't check your credit score, that of your co-applicant can clinch the loan for you. A parent, brother, sister or spouse are appropriate go take on as a co-applicant. Friends or an associate cannot also be one.
Gold loans: More and more people in India are turning to gold loans. Gold loans involve pawning gold jewellery or coins/bars with a lending institution and getting money linked to the value of the gold content. The interest rate is considerably lower than that in personal loans. The process is quick too. Right now, according to RBI rules, one can get Rs 75,000 for every Rs 1 lakh value of gold pledged. If the loan is below Rs 2.5 lakh, the amount of loan goes up from 75% of the value of the metal to 85%.
Salary advance: For a salaried employee one way out is salary advance from the employer. It requires little paperwork and no credit history. While many employers readily offer salary advances to employees, there are companies that tie up with third-party platforms to offer short-term loans which, of course, are linked to the applicant's monthly income. There are online platforms which act as third party partners.
Cooperative lenders: Credit societies and cooperative lenders are another category of agencies to whom one can turn to for loans. These typically offer small ticket credit and they offer loans to individuals who become their members.
P2P platforms: There is yet another category known as P2P (peer to peer) lending. But one must take care to ensure it is an RBI-approved P2P lending site. They offer loans for individuals who don't have access to traditional banking systems. The source of funds is individuals who have money to invest in such credit.