Ever thought a low CIBIL score was the end of the road for getting an unsecured loan? Well, here’s a surprise—it doesn’t have to be. While a low score can make things tougher, it’s not the dealbreaker you might think. 

In fact, many MSME owners with scores below 650 have still been approved for unsecured loans. by understanding how their score works and taking the right steps to improve it. With the right strategy, you can flip the script on your credit score and increase your chances of approval.

How CIBIL Score Impacts Access to Secured and Unsecured Loans

As an MSME owner, your CIBIL score plays a big role in determining whether you qualify for a secured or unsecured loan and what kind of terms you’ll get.

• Secured Loans: If you have assets like property or equipment, these can be used as collateral to back your loan. This makes the approval process smoother, even if your CIBIL score isn’t stellar. You’ll also benefit from better interest rates and higher loan amounts.
• Unsecured Loans: When there’s no collateral involved, lenders turn to your CIBIL score to assess your risk. A high score (above 750) typically means faster loan approval and more favorable terms. A lower score may not rule you out, but expect higher interest rates and possibly additional checks.

Bottom line: Your CIBIL score is key to unlocking the best loan options for your business.

Why CIBIL Score Matters for MSMEs

Your CIBIL score is like a financial report card—it shows how well you’ve managed borrowing and repaying money in the past. It ranges from 300 to 900, with scores above 700 being considered good. Lenders use your score to decide if they’ll lend to you, so it’s often the first thing they look at.

As an MSME owner without collateral, your CIBIL score plays a crucial role in loan approval. A score of 750+ makes approval easier and increases your chances of getting the loan you need.

Here’s why your CIBIL score matters:

1. Unsecured Loans & Approval: If you’re applying for a loan without any collateral (like property), your CIBIL score is what lenders look at the most. A high score tells them you’re more likely to repay. If your score is low, it’s not impossible to get a loan, but it’s a lot harder. While banks can be stricter, NBFCs (Non-Banking Financial Companies) may still offer loans to those with lower scores, but you might pay a higher interest rate or face some extra conditions.
2. Loan Amounts & Flexibility: A good score doesn’t just help you get approved; it also gives you a better shot at higher loan amounts and more flexible repayment options. This means you can spread out payments or get a larger loan, depending on your needs.
3. Interest Rates: The better your score, the lower your interest rate will be. This means you’ll pay less in the long run. A low score could mean a higher interest rate to cover the lender’s risk.
4. Faster Loan Processing: If your CIBIL score is high, lenders are more likely to approve your loan quickly. You’ll get access to the funds you need, faster than if your score is low.
5. Open Doors to Better Opportunities: A good CIBIL score doesn’t just help you get a loan—it helps you get better deals! With a higher score, you’re more likely to get better loan terms, faster approvals, and even build stronger relationships with lenders, suppliers, and investors. It’s about giving your business a chance to grow and thrive.

How to Get a Loan Even with a Low CIBIL Score

If your CIBIL score is a bit low, don’t worry—it doesn’t mean you can’t get a loan for your MSME. Yes, it might make things a little tougher, but it’s not impossible. Here’s how you can still improve your chances of getting that loan:

1. Always Pay Your Bills and EMIs on Time
   It might sound simple, but paying your bills on time can do wonders! Whether it’s your credit cards or loans, timely payments show lenders you’re on top of your finances. Missing payments can hurt your score, making it harder to get the loan you need. Stay punctual!
2. Keep an Eye on Your Credit Report
   Think of your credit report like a regular health check-up for your finances. By reviewing it often, you can spot any mistakes or old info that could be pulling your score down. Fixing these little things could make a big difference when you apply for a loan!
3. Use Less of Your Credit Limit
   Don’t hit the limit on your credit card. Keeping your spending well below the maximum limit shows lenders you’re managing your credit wisely and helps improve your score over time.
4. Don’t Apply for Too Many Loans
   Applying for too many loans at once can give the wrong impression to lenders. It can look like you’re desperate for funds. Instead, take your time and apply with trusted lenders for a better shot at approval.
5. Pay Down Your Debt
   The less debt you have, the better your credit score! If you’ve got any outstanding balances, tackling them can quickly improve your score and boost your chances of securing that loan.
6. Keep Your Older Credit Accounts Open
   Longer credit histories work in your favor! If you have old accounts, even if you’re not using them, keep them open. A longer history shows lenders you’re reliable, making you more appealing when you apply for a loan.
7. Register your MSME under Udyam

While a low CIBIL score can make it tougher to get a loan, registering your MSME under Udyam can help lenders see your business is officially recognized. It won’t guarantee loan approval, but it can give you a better chance by showing you’re serious about your business.

Conclusion

Your CIBIL score is a key factor in determining the loans available to you, affecting approval speed and terms. A higher score opens doors to better options, but even if your score is lower, there are still chances to secure financing.

At MyShubhLife, we’re here to help MSMEs get the funding they need through simple, digital loan solutions with flexible terms. Visit www.MyShubhLife.com or download the MyShubhLife app today to explore how we can support your business growth.