One of the excellent assistance offered to assist students in affording their higher education is an education loan. These loans feature a reduced interest rate and more flexible repayment terms, making it easier for students to repay the debt. In most cases, a student loan is given based on their parents’ CIBIL score. As a result, it is critical for parents to have a high Credit score in order to acquire an education loan for their children.
Most of us seek an education loan from a bank in order to fund our schooling. If you are unable to obtain an education loan due to a poor credit score, it might be a difficult situation.
If you have low credit and are seeking an education loan, this article can be extremely beneficial.
How to Get An Education Loan In Case of a Low CIBIL Score?
You have a consistent source of income/salary.
Consider the case where you were unemployed for a few years and failed to pay a few credit card and electricity payments. Fortunately, the tables have turned, and you now work for a reputable company with a decent or high pay. In this instance, regardless of your CIBIL score, your loan application will be approved.
Your Father’s/ Guardian’s Good Credit score:
You can acquire an education loan even if you have a bad credit history since your guarantor has a strong credit score. Your guarantor’s creditworthiness, income, and employment will be checked by the lender.
Look for non-banking financial companies (NBFCs) that offer loans to persons with bad credit.
Several non-banking financial institutions provide simple personal loans for those with weak credit. They provide loans without doing a credit check. The caveat is that you might have to pay greater interest rates than usual.
Secured education loans are available with collateral.
If you have a bad credit score, the bank may accept collateral. Hence, you can apply for secured education loans by offering collateral and make a future for your child. This may also assist in lowering the individual’s loan interest rates.
Personal loans should be for a little amount.
If a person borrows a large sum of money with a low credit score, the lender may view him as a hazardous client. So, in order to improve his credit score, he should borrow a smaller amount and repay it annually. This will earn the lender’s belief in his creditworthiness, and he will be able to request a larger loan amount. It would also be easier on the wallet to repay a smaller amount.
You can also make a list of the factors that contributed to your poor credit score. If your arguments are genuine, the bank may take them into consideration.
The Bottom Line
You don’t have to give up your secondary or undergraduate education goals just because you have a low CIBIL credit score. There are additional options for obtaining education and undergraduate student loans, including a private student loan with no cosigner.
You can also work on raising your CIBIL credit score. While this may take some time, it will be well worth the effort.
Also, while receiving an education loan with a low CIBIL credit score is tough, it’s not impossible. To indicate to lenders that you can pay monthly bills and have the capacity to repay, correct inaccuracies in your credit record, pay current obligations on time, and produce evidence of income.
It’s critical to have a high CIBIL credit score in order to be approved for a student loan and achieve your higher education ambitions. If your credit score is currently low, take efforts on how to improve cibil score before applying for an education loan, or consider finding a reputable cosigner to cosign an education loan with you.