How to Secure an Educational Loan in India with a Low Credit Score?

I have a low credit score and most banks have rejected my educational loan application. Are there any solutions to obtain an educational loan in India?

Securing education loans for abroad has been labeled as the most difficult part of the process by students, primarily due to a lack of knowledge, awareness, and exposure to the financial aspect. While students are well-prepared in areas like scores, letters of recommendation, and statements of purpose, they often lack guidance when it comes to the CIBIL score and its effect. This leads to uncertainty and mistakes in loan applications, resulting in rejections. To avoid this, thorough research is crucial before applying for a loan.

How to Get an Abroad Education Loan with a Low CIBIL Score

While it is challenging to get an education loan with a low CIBIL score, it is not impossible. Here are some tips on how you can avail an abroad education loan even with a low CIBIL score:

  1. Timely Repayment on Current Bills Having a record of timely payments of your current bills, such as credit cards, EMIs, utility bills, etc., will help in building a good credit score, which will further help in loan approval. So, before applying for a student loan, ensure that you have paid your current bills.
  2. Showing Proof of Income A good income will prove to the lender that the applicant can repay the loan. Even with a bad credit score, proof of income shows that the borrower is adequately financially stable to repay the loan.
  3. Apply for an Education Loan from NBFCs Banks tend to scrutinize the loan application rigorously. Whereas, NBFCs might relax some policies if the student’s profile is outstanding.
  4. Apply for a Secured Education Loan In the case of a secured education loan, credit score becomes a secondary factor. The value of the property pledged is of utmost importance. An applicant with a bad credit score can be approved for a loan if they pledge appropriate collateral.

Affect of Cibil Score on Education Loan | How Cibil Score Works? | Does Education Loan Affect CIBIL?

  1. Resolve Credit Report Errors The best method to ensure your bad credit score doesn’t ruin your chances of getting a loan is to resolve the errors. A mistake or an error in the report can also occur. Review your credit report every six months to ensure this doesn’t happen again.

By following these tips, you can improve your chances of securing an education loan for studying abroad despite having a low CIBIL score. Thorough research and preparation can significantly enhance your prospects and help you avoid common pitfalls in the loan application process.