The biggest dilemma for a person with ZERO credit history is how to increase CIBIL Score? The banks and financial institutions are not willing to approve a loan to high risk borrowers including loan applicants with zero credit history. It’s a classic situation faced by a fresher seeking first. Companies are not willing to hire a fresher, however, if they will not get the opportunity to work in a corporate then how they will gain experience. Similarly, if the person with zero credit history will not get a loan then how they will build and improve their credit score.
The good news is that now the potential borrowers with zero credit history build/improve/increase their credit score.
What is the Solution?
Improving Credit Score with Personal Loans is a smart way to increase/build/improve the credit score. Around 6 months back i was going through the website of online loan provider – PaySense.
Quite interestingly, this company provides short term loans to individuals with zero credit history so that they can improve/build/increase their credit score. The concept of improving Credit Score with Personal Loans is revolutionary in the sense that it’s like offering a job to the fresher so that they can gain corporate experience and climb higher on the ladder. In other words, if you have never availed any type of loan or credit card and your credit score is 0 or -1 then you can avail short term personal loan. Now you must be wondering how the concept of Improving Credit Score with Personal Loans will work? Let’s check out –
Improving Credit Score with Personal Loans
Step 1: If your salary is Rs. 15k+ per month and credit score is 0 or -1 then you can avail personal loan from PaySense. In some cities, the minimum salary criteria is Rs. 12k+ per month.
Step 2: PaySense will approve the instant loan of between Rs. 5k and Rs. 2 lakh depending on your eligibility criterion. Like all personal loans, the repayment period will be between 3 months to 24 months.
Step 3: This is the crucial step in Improving Credit Score with Personal Loans i.e. pay your EMI’s on time. The discipline is very important i.e. to repay the loan on time is one of the most crucial factors to decide the creditworthiness of a borrower.
Just to add that credit score does not improve overnight. After availing the personal loan, once you start repayment of EMI’s on time, you will observe gradual improvement in your credit score. It can take up to 1 year to improve the credit score. You can avail multiple short-term loans till your credit score is within an acceptable range to avail the desired loan from banks or financial institutions.
As I have mentioned it multiple times in my earlier posts, as a thumb rule, you should not avail more than 30% of available credit limit.
Advantages of Improving Credit Score with Personal Loans
- You can avail personal loan with zero credit history. However, it is next to impossible to get a credit card or avail loans like home loan, auto loan etc with zero credit history.
- You can avail as many short-term personal loans as you wish & till your credit score reach 650+ or more.
- You can apply online and get an instant disbursement.
- Besides credit score improvement, you can utilize the funds for the short-term financial requirements.
- Credit discipline will ensure an increase in credit score at a faster rate.