A loan against property is a secured loan that you can get by pledging your property as collateral to get the required finances for personal or business purposes. However, there are certain requirements that lenders have before giving out such loans, one being a decent credit score.
Now, what about the borrowers who might not have the required credit score? While it does become difficult for the loan application to get approved, this does not mean that there is no way for such borrowers to get the loan.
Look at the following things you can do in order to get a loan against property if your credit score is low:
- Have a steady record of monthly income
Lenders look at various factors while deciding whether to approve or reject a loan application. While having a low credit score is a negative sign, if you can show the lender a good employment record where you have stability along with a high monthly income, it could improve your chances of getting a loan approval.
- Look for a lender that you already have a relationship with
A lender might not trust a new customer with a low credit score to repay the loan. However, if you already have an existing relationship with a lender with whom you have taken loans in the past and cleared them on time, it is better to apply for a loan with them. This is because customer loyalty can improve the chances of a loan approval.
- Clear off all your existing debts
It is very likely that your credit score is low because of delayed payments or payments that are yet to be cleared. One effective way of improving your credit score is to clear off all existing debts and continue to pay off any bills by their payment dates. Make sure to pay all utility bills, credit card bills, loan EMIs, etc. on time. This way, your credit score will improve, which will help your case while applying for a loan against property.
- Apply for the loan with a co-applicant
If you have a low credit score, consider applying for the loan with a co-applicant who has a decent credit score. This way, the lender will see that there are two active applicants who are earning with at least one having a decent credit score. This can improve the chances of getting a loan approval.
Now, even though it is not impossible to get a loan against property with a low credit score, do keep in mind that the loan against property interest rate might be higher. Even the loan amount might not be what you are looking for, which is why it is better to improve your credit score before applying for this loan. Check with the lender regarding their loan against property eligibility criteria so that you know what to expect before applying for the loan.