Overseas Education Loan CIBIL Score: How to Secure a Loan with a Low Score?

The desire for a world-class education in a foreign University is a dream for many Indian students. After all, a globally recognized degree opens doors and helps students stand out in a competitive job market. However, the rising costs of tuition and living expenses abroad mean that one must seriously evaluate their options and consider ways to cover those costs, including the best options for overseas education loans on the Indian market.

Many factors go into determining the most ideal overseas loan scheme, from the type of loan and lender to the applicant’s requirements and financial profile. If a student’s overseas education loan CIBIL score is low, for example, they might face challenges during the loan sanction period.

However, it isn’t impossible to find an amenable solution in such a situation. This article will guide students through getting an overseas education loan with a low CIBIL score.

Importance of the Overseas Education Loan CIBIL Score

Before getting into strategies to secure an overseas education loan on a low CIBIL score, we must first understand what it means. Also known as a credit score, this 3-digit number is a signal of financial health. The higher one’s credit score is, the more likely they are to be trusted by lenders. A good credit score also unlocks certain benefits for an overseas education loan, as mentioned below.

• Applicants are likely to get sanctioned for higher loan amounts with a good credit score

• Students can negotiate for lower interest rates and reduce the overall loan repayment amount

• Sometimes, lenders offer a longer loan tenure to applicants with a good credit score, which makes for smaller EMIs

• A good financial profile can be fast-tracked for a loan and receive a quick sanction as well

A CIBIL score ranges from 300 to 900, with lenders usually accepting scores above 650 or 700. A score above 750 is deemed excellent, while one below 600 is considered lower. If one’s credit score is on the lower end, they can follow the directives given in the next section to get an overseas education loan.

Tips to Get an Overseas Education Loan with a Low CIBIL Score

While a high CIBIL score greases the wheels for a loan sanction, there are some ways to do so even with a low CIBIL score. Students can implement some of the strategies listed below.

• Option for a secured education loan so that the lender can rely on the asset provided as collateral to reduce the risk of missing an overseas education loan repayment.

• Bring on a guarantor or co-signer with a strong financial profile. This individual can help strengthen the applicant’s case and share the responsibility of repaying the loan.

• Apply for government-sponsored interest subsidy schemes that have more accessible criteria for the student’s overseas education loan CIBIL score.

• Show a steady source of income and tax returns to lenders to prove that loan repayments will happen on time.

• Students can also try applying for overseas education loans with Non-Banking Financial Companies (NBFCs), which have more flexible eligibility criteria for overseas education loans.

• Check the CIBIL score for any errors and resubmit it to improve the score. Applicants can also wait 6 months and reapply for the loan, as the score changes every few months.

Apart from all these strategies, students can also check and try to improve their overseas education loan CIBIL score before they start applying. Moving ahead, let us get a closer look at some financial behaviors that help systematically increase their CIBIL score over time.

Ways to Improve Your Overseas Education Loan CIBIL Score

A CIBIL score is not constant – it may be low when one first checks it, but it may improve if one waits for some time and engages in responsible financial practices. Some ways to improve the overseas education loan CIBIL score are mentioned below.

• Maintaining a credit utilization ratio between 30% and 50% to signify a lack of financial strain.

• Making timely payments on previous loans, bills, large purchases, and credit cards to signify trustworthiness.

• Trying not to apply for too many overseas education loans at once, as each loan rejection can further drive down one’s credit score.

• Applying for a smaller loan for an appliance or household item and repaying the amount on time to boost the CIBIL score, be recognized for regular repayments, and build trust with the lender.

• Monitoring the CIBIL score every few months to track discrepancies and fraudulent activity that may have an impact on the overall score.

In essence, the student’s overseas education loan CIBIL score determines not only the types of loans or lenders they can apply to but also informs the time it takes for the abroad education loan process. This can easily be avoided with the help of experienced overseas education loan consultants, who can guide the students along the steps they need to take for a loan sanction.