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If you’re worried that a low CIBIL score might stop you from securing an education loan, you’re not alone. Many students face this problem, especially when they or their parents have a less-than-perfect credit history. But don’t panic—there are still plenty of ways to secure an education loan, even with a low or no CIBIL score.
We'll explain everything you need to know about getting an education loan with low CIBIL score, including how much CIBIL score is required for education loans, banks that offer loans to students with low or no CIBIL scores, and alternatives you can explore.
What is a CIBIL Score?
A CIBIL score is a three-digit number that represents your creditworthiness. It’s a key factor for banks when deciding whether to approve loans, including education loans. The score ranges from 300 to 900, with scores above 750 considered good for loan approvals.
But if your CIBIL score is low (below 750), don’t worry. You can still apply for an education loan with a low CIBIL score, though the loan terms might be different.
Also Read: Axis Bank Education Loan 2024
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How Much CIBIL Score is Required for an Education Loan?
Typically, banks prefer a CIBIL score of 750 or higher for education loans. However, this isn’t a strict rule. Some banks and financial institutions are willing to offer education loans to students with CIBIL scores below 750 or even no CIBIL score at all.
When banks see a low CIBIL score, they often compensate by:
- Charging higher interest rates.
- Asking for collateral (like property or fixed deposits).
- Considering the financial history of a co-applicant (usually a parent or guardian).
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Can You Get an Education Loan with a Low CIBIL Score?
Yes, you can absolutely get an education loan with low CIBIL score, but there are a few things to keep in mind:
1. Interest Rates
Lenders often compensate for the risk of a low CIBIL score by charging higher interest rates.
2. Collateral
Some banks might ask you to pledge collateral such as a property, vehicle, or a fixed deposit to secure the loan.
3. Co-applicant’s CIBIL Score
If your CIBIL score is low, banks often rely on the co-applicant's financial history to make a decision. A co-applicant with a good score can boost your chances of approval.
4. Non-Banking Financial Companies (NBFCs)
NBFCs like HDFC Credila, Avanse Financial Services, and InCred are often more lenient with CIBIL score requirements. They may even offer education loans without checking CIBIL scores.
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How to Secure an Education Loan Without CIBIL Score?
To secure an education loan without a CIBIL score, there are several options. Here's how you can explore alternatives that don't rely heavily on credit scores:
1. NBFCs Can Be a Great Option
Non-banking financial institutions like HDFC Credila or Avanse Financial Services offer loans to students without CIBIL scores, though they might charge a slightly higher interest rate.
2. Explore Government Schemes
Many government-backed schemes don’t require you to have a CIBIL score at all. For example, the Vidya Lakshmi Portal offers education loans to students from economically weaker sections without heavy emphasis on CIBIL scores.
3. Check for Secured Loans
Banks and NBFCs may provide loans against collateral such as property, fixed deposits, or gold. In these cases, your credit score becomes less relevant, as the asset serves as security.
4. Get a Co-Signer or Guarantor
A family member with a strong credit score can act as a guarantor for your loan. The bank will evaluate their financial history instead of relying solely on your credit score.
5. Explore Education Loans from Small Finance Banks
Some small finance banks have more relaxed credit requirements and might focus more on your academic performance and potential rather than your credit history.
6. Get Education Loan on the Basis of Future Income
Some lenders, particularly fintech companies, may offer loans based on your potential to earn in the future. These loans evaluate the course you're pursuing and the potential salary in your chosen field.
7. Check for Peer-to-Peer Lending
Peer-to-peer lending platforms connect you with individual investors who might be willing to finance your education based on different criteria, including the potential of your degree.
Also Read: How to Get an Education Loan for Abroad Studies in 2024?
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Which Banks Give Loan for Low CIBIL Score?
Several banks in India understand the challenges of a low CIBIL score. If you’re wondering which bank give loan for low CIBIL score, here are your top options:
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Government Schemes for Students with Low or No CIBIL Score
The Indian government has launched multiple schemes to ensure that students with low or no CIBIL score can still get education loans:
Education Loan with Low CIBIL Score: Eligibility
Also Read: Apply for a Student Loan in India for UG Program.
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Pros and Cons of Education Loans with Low CIBIL Score
Here are some benefits and cons for an education loan with low cibil score or without a cibil score.
Also Read: Bank of Maharashtra Education Loan: Eligibility and Interest Rates
Getting an education loan with a low CIBIL score may seem like an uphill task, but with the right approach, you can secure the funds you need. Whether you opt for public sector banks, NBFCs, or government schemes, there are plenty of options available.
Make sure to compare interest rates, terms, and conditions before making a final decision. And remember, even if your CIBIL score is low, there’s always a way forward.
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