My CIBIL score (as on today is 709 as per TransUnion). I had been part of an organization which had settled loans 5 yrs ago. I am not part of the organization anymore. I am now a salaried person. I have been paying my credit card bills on time and have taken all precautions to increase my cibil. Can I get a car loan ?

Ans: I'm sorry to hear about the challenges you faced during the pandemic, but I'm glad to hear that you've taken steps to address your financial situation. Rebuilding your credit score after experiencing defaults can take time, but it's certainly achievable with patience and dedication. Here are some steps you can take to begin the process:

Check Your Credit Report: Start by obtaining a copy of your credit report from all major credit bureaus (CIBIL, Equifax, Experian). Review the report carefully to understand the factors contributing to your low score and identify any errors or discrepancies that need to be corrected.
Pay Bills on Time: Moving forward, ensure that you pay all your bills, including credit card bills, loans, and utility bills, on time. Timely payments are one of the most crucial factors in rebuilding your credit score.
Reduce Credit Card Balances: Aim to keep your credit card balances low relative to your credit limit. High credit utilization can negatively impact your credit score, so focus on paying down your credit card balances as much as possible.
Limit New Credit Applications: Avoid applying for multiple new credit cards or loans within a short period as it can indicate financial distress to lenders. Instead, focus on managing your existing credit responsibly.
Diversify Your Credit Portfolio: Having a mix of credit accounts, such as credit cards, installment loans, and a mortgage, can positively impact your credit score. If feasible, consider diversifying your credit portfolio over time.
Use Secured Credit Cards: If you're struggling to qualify for traditional credit cards, consider applying for a secured credit card. Secured cards require a security deposit, making them easier to obtain for individuals with damaged credit.
Monitor Your Progress: Regularly monitor your credit score and credit report to track your progress. Many credit monitoring services offer free credit score tracking, making it easier to stay updated on your credit health.
Remember, rebuilding your credit score is a gradual process that requires consistency and responsible financial behavior. By following these steps and demonstrating responsible credit management over time, you can steadily improve your creditworthiness and regain financial stability. If you need further assistance, consider consulting with a financial advisor or credit counselor for personalized guidance.

Ans: Getting a personal loan with a low CIBIL score can be challenging, but it's not impossible. Here are some strategies you can consider:

Improve Your CIBIL Score (if possible):

Check and Fix Errors: Ensure your credit report is accurate. Dispute any errors you find with CIBIL to improve your score.
Reduce Credit Utilization: Pay down existing credit card balances to bring your credit utilization ratio (outstanding credit divided by credit limit) below 30%.
Maintain a Good Repayment History: Make timely payments on all your existing loans and credit cards.
Approaching Lenders:

Focus on NBFCs and Fintech lenders: These lenders may be more flexible with credit score requirements compared to traditional banks.
Apply with a Co-applicant: Having a co-applicant with a good credit score can significantly improve your chances of loan approval and potentially get you a better interest rate.
Offer Collateral (if possible): Securing the loan with collateral like a car or fixed deposit can make it more attractive to lenders, even with a low credit score.
Negotiate Loan Terms: You might be able to negotiate a smaller loan amount or a slightly higher interest rate to get approved.
Additional Tips:

Compare Loan Offers: Get quotes from multiple lenders to compare interest rates and terms before finalizing a loan.
Borrow Only What You Need: Avoid borrowing more than you can comfortably repay.
Be Wary of High-Cost Loans: Steer clear of lenders offering very high interest rates or predatory loan terms.
Here are some resources that you might find helpful:

CIBIL Website: https://www.cibil.com/
Paisabazaar - Personal Loan for Low Credit Score: https://www.paisabazaar.com/credit-score/cibil-score-for-personal-loan/
ICICI Bank - Personal Loan with Low Credit Score: https://www.icicibank.com/blogs/personal-loan/personal-loan-with-a-low-cibil-score
Remember, a low CIBIL score can lead to higher interest rates on your loan. So it's important to weigh the cost of the loan against your needs before proceeding.

Ans: Since your CIBIL score is now a strong 765, it reflects a solid recovery despite past issues. However, to further improve it, focus on maintaining a perfect repayment history for all current credit. Avoid closing old accounts with good history, as they contribute positively. Regularly monitor your CIBIL report to ensure no errors. Over time, consistent and responsible credit behavior will enhance your score further.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment