A bad Cibil credit score can limit your borrowing options; however there are few other options which you can explore for credit.
Kaushik Gowda, a Noida-based techie was in for a rude shock when his home loan application was rejected by a leading housing finance company (HFC). When he pulled out his personalised credit score, he discovered that it was a pathetically low score of 535. But that did not dampen his spirit. Despite discovering a lot of discrepancies in his credit score, he went ahead with strong support from his wife who had a healthy score of 790.
"Along with starting the application process with Corporation Bank, I also worked on removing the derogatory information on my Credit file and many credit cards against my name that weren't held by me. Thankfully my wife's score was good and she had a good history, so we went to the bank and told the manager honestly about our case and requested him to consider our application and he obliged. We are waiting for the sanction letter as of now," said Gowda.
Following are the options to fund your requirements in case of a bad credit score:
Check your spouse's score
If you are married to a person with a better credit score than your, it may help you a bit. Get your spouse to be a joint loan holder in that case.
Look for HFCs who offer loans to people with lower credit score
There are companies who offer loan to people with bad credit score. They may offer it to you at higher rate of interest than the prevailing interests, but it is worth a try. It may burn a hole in your pocket, but in the long run, it would help in building credit score. May be in a couple of years' time you could transfer your loan to lower interest rates; by then your credit score would have improved substantially.
It is a widely established practice abroad. The concept is slowly picking up in India. The interest rates are a tad higher than the market rates and the loan size may be smaller, but there is an option.
You would love India for its closely-knit families, if you know that many families across the country have a family bank. The members and customers of these kind of banks are families themselves. In some cases, an outsider can get a loan with the guarantee and approval of a member.
There are many such products available: loan against shares and securities, loan against FDs, gold loan and many others. Banks don't really go digging into your credit history for such products.
Friends and family
If nothing else works, borrow from friends and family. Now this completely depends on the personal equation and rapport you share with your near and dear ones. Also, you must understand that they should be confident that you are not spendthrift and you have your priorities in place. Else they will not lend any money to you.
Photograph: me and the sysop/Creative Commons
The author is Co-founder and Director Credit Vidya.