Low Credit Score? Financial Institutes That Still Offer Personal Loans

Contrary to common myth, you can still get a Personal Loan with a low credit score. However, in most cases, you will be charged exorbitantly higher interest rates, and the approval process will be challenging.

When it comes to Personal Loan approval, lenders have a minimum CIBIL score requirement of 750 or more. However, you can get a Personal Loan even with a low CIBIL score of 680 – 720 from certain lenders under strict terms and conditions.

In this blog, we will explore financial institutes that will give you a Personal Loan even if you have a low credit score and offer tips to secure a loan with a low score. Read on to know more!

Financial Institutes That Offer Personal Loan on Low Credit Score

Ideally, all financial institute in India require a minimum credit score of 750 or more for Personal Loan approval. However, you can still get a Personal Loan with a low credit score from the following lenders:

Banks You’ve an FD With

Certain banks provide loans against a fixed deposit, ideal for people who have a poor credit score. However, you must have an FD with the bank in the first place or create one before applying for the secured loan. This FD serves as collateral against your Personal Loan, reducing the lending risk and allowing the bank to approve the loan.

Non-Banking Financial Companies (NBFCs)

Certain Non-Banking Financial Companies (NBFCs) have lenient credit score requirements for Personal Loan approval. You can get a Personal Loan with a low credit score from such lenders who may accept a CIBIL score in the range of 680 to 720 as well.

Fintech Platforms 

Certain fintech platforms e.g., RBI recognized account aggregators can match your credit profile to lenders who provide personal loans even if you have a low credit score. It is worthwhile researching Personal Loan offers on such online aggregator platforms if you’re struggling with a poor credit score but need funds.

Tips to Secure a Personal Loan With Low Credit Score

Even if you are struggling with a poor credit score, you can secure a Personal Loan by following these simple yet effective recommendations.

Research lenders

As stated earlier, certain banks and NBFCs offer Personal Loan even to those with a low credit score under certain terms and conditions. Research lenders and apply for a loan with such a bank/NBFC for maximum chances of approval.

Opt for a secured loan

If you have a poor credit history then going for a secured loan can be the simplest way to get funds. However, in case of a secured loan, you’ll have to pledge a collateral with the lender. For example, you can get a Personal Loan against fixed deposit where the deposit value serves as the collateral to reduce the risk of lending.

Apply for a smaller amount

Sometimes applying for a smaller loan amount can instill confidence in your repayment capacity. Under such circumstances, it becomes easier for the lender to sanction a Personal Loan even if you've a poor credit report.

Apply with a co-applicant

You can always apply for a Personal Loan with a co-applicant or guarantor if you’ve a low credit score. A co-applicant can be your spouse or parents. However, the co-applicant must have an excellent credit score with a stable source of income.

How to Improve Credit Score for Better Personal Loan Rates

You can transition from a low credit score to a good-to-excellent credit score and qualify for lower interest rates and better loan terms. Here are a few tips to follow:

• Clear all outstanding balances
• Maintain timely repayments
• Lower your credit utilisation ratio to below 30%
• Abstain from applying for new loans/credit cards
• Maintain a good credit mix of loans and credit cards
• Check your CIBIL report for errors and rectify them

To Conclude

While it is not impossible to obtain a Personal Loan with a low credit score, a high credit score opens the door to lower interest rates and better loan terms and conditions. In addition, you can sometimes negotiate your loan offer with lenders if you’ve an excellent credit report.

This is why, building an excellent credit score is important by maintaining timely repayments and clearing all outstanding dues at first. Poonawalla Fincorp provide personal loans to eligible applicants having a credit score of 750 or above. Improve your credit profile and apply online for instant approval up to ₹50 Lakhs.

Frequently Asked Questions

Can I get a Personal Loan with low credit score?

Yes, you can get a Personal Loan with a low credit score although the loan terms and conditions may not be very favourable and involve high interest rates.

What is the minimum CIBIL score required for a Personal Loan?

Ideally, all top banks and NBFCs require a good CIBIL score of 750 or more for Personal Loan eligibility.

How much Personal Loan can I get with a 750+ CIBIL score?

You can get a Personal Loan of up to ₹50 Lakh from Poonawalla Fincorp at competitive interest rates and flexible repayment tenure if you’ve a good CIBIL score of 750 or more.

Can I get a low interest Personal Loan with a low credit score?

It is extremely unlikely to get a low interest Personal Loan with a low credit score. You must apply with a minimum score of 750 or more to avail of a Personal Loan at competitive interest rates.

Which banks provide Personal Loan even with a low credit score?

All banks require a 750+ credit score for Personal Loan approval. However, you can apply for a secured loan such as a loan against FD with a bank for maximum chances of your Personal Loan approval.

Where can I get a Personal Loan even with a low credit score?

You can get a Personal Loan with a low credit score by applying with a relevant lender who have lenient eligibility criteria. Certain NBFCs provide loans to those who have a credit score that is slightly less than 750 but higher than 680.