Think a low credit score means you can’t get a loan? There are still plenty of ways to make it work. The approval for your loan is determined based on your credit score. A high score often means faster approvals and better interest rates. But what if your score is far from ideal?
Say you’re facing an unexpected expense and need a personal loan. If your credit score is below 700, then lenders may see you as a high-risk borrower. But that doesn’t mean your options are closed.
In this article, we’ll show you ways to increase your chances of getting a loan approved, even with a low credit score. Read on to discover the strategies that can help you unlock funding when you need it most.
What is a Low Credit Score?
A credit score is a representation of how responsible you are with money. A score of less than 700 is frequently regarded as low in India and indicates to lenders that you might be a greater credit risk. This can make it harder to get approval for loans or credit cards. Even if you have an approval, it can have less favourable terms or higher interest rates.
But that doesn’t mean you cannot get a loan. Some lenders offer low credit score loans, which are designed for people with lower scores. The interest rates might be a little higher, but it’s still a chance to get the money you need and rebuild your credit over time.
5 Ways to Get Personal Loans with a Low Credit Score
If you’re wondering how to get a loan with low credit score, you’ll be glad to know there are many practical steps you can take to improve your chances.
1. Find the Right Lender
Some lenders understand that not everyone has a perfect credit history. Find a lender who offers low credit score personal loans with simpler approval processes.
2. Offer Collateral
Applying for a loan by providing collateral can help you get approval for your loan. It makes it easier for lenders to trust you and approve your loan.
3. Apply for a Lower Loan Amount
Asking for a smaller loan can help you get approved more easily. Lenders are more likely to say yes when the risk is lower. It’s easier to get a loan with a low credit score if you don’t ask for more than what you can pay back.
4. Get a Co-applicant
Your chances can be greatly improved if a friend or family member with a high credit score is ready to help you apply for a loan. Having someone else support you makes lenders feel more secure.
5. Prove a Steady Income
Showing that you have a stable job or regular income helps, even if you have a low credit score. It tells lenders that you can manage repayment and it makes it easier to get a loan with low credit score.
What If Your Loan Application is Rejected?
If your personal loan application is turned down, don’t give up. Here’s what to do next:
1. Understand Why It Was Rejected:
Ask the lender why your application was rejected. It could be because of your credit score or something else.
2. Work on Your Score:
Start small – pay bills on time, lower your credit card balance, and avoid applying for too many loans at once. Here’s a useful guide on how to improve your credit score.
3. Try Other Options:
Some lenders, like LoanTap, are more flexible. They might still offer you a loan, even with a low score.
4. Wait Before Applying Again:
If your application was rejected, don’t rush to apply again. Give yourself time to fix your credit and come back stronger.
Conclusion
A low credit score should not stop you from getting the financial aid that you need. With some planning, low credit score loans can help you through difficult times. While it’s possible to get approvals with low credit scores, the journey becomes much smoother when your credit score is in good shape.
A higher credit score boosts your chances of getting a personal loan and also helps give you quicker approvals and more flexible repayment terms.
FAQs
What constitutes a low credit score in India?
In India, a credit score below 700 is generally considered low.
Can I get a personal loan with a low credit score?
Yes, it is possible to get a personal loan even with a low credit score. Some lenders offer low credit score personal loans based on your income and repayment ability.
How can I improve my chances of loan approval with a low credit score?
You can boost your chances by applying for a lower amount, offering collateral, adding a co-applicant with a good score, and showing proof of steady income.
What should I do if my loan application is denied?
Start by finding out why your application was denied. Work on those issues and consider lenders who may offer more flexible options. Also, you can focus on how you can improve your credit score before reapplying.
Are low credit score loans safe?
Yes, provided that you choose a registered and reputable lender. Always read the terms and conditions carefully before signing.
