Life is an unexpected roller coaster ride. You cannot predict an emergency situation beforehand. So, manage that situation financially is not possible for everyone. Well, for that Personal Loan is your backup for financial emergencies. Personal loan is an unsecured loan which does not require any collateral to keep with the lending institution. So, banks and NBFCs check your credit score to have an idea of your repaying capacity. A good credit score of 750 or above is a must to apply for personal loan. So, is it not possible to get personal loan with low credit score? Let’s discuss it in details.
How does Credit Score work?
Credit Score is assigned by the credit bureaus to check your repaying ability. If you have a good credit score of 750 or above, it reflects that you do pay your financial liability at right time without defaulting it. But if you have a low credit score of less than 750, then your ability to repay becomes a big question.
Low credit score means you may have been late in paying your credit liability or have been a default at paying your existing loan liability. As because, personal loan is an unsecured loan, lending institutions mainly rely on your credit score before approving the loan. So, a low credit score might be an obstacle for getting personal loan.
How to avail personal loan with credit score?
Though credit score is an important parameter for getting personal loan, but there are some other factors which are also very essential like- your age, net take-home salary, employment type, employment status, and residential proof. So, even if you have a low credit score, then also you can get personal loan satisfying the above-mentioned criteria.
In order to get a personal loan for low credit score, you can take the following options-
- Reputed organization tie-up – If you work in an organization which has a good relationship with banks, then it won’t be much difficult for you to get personal loan with low credit score. The banks will be assured of your job stability and your ability to pay back. So, in return, your low credit score will not be a big issue and the eligibility criteria will be relaxed based on your organization’s existing relationships with banks.
- Co-applicant – Banks usually get skeptical of giving loan with a low credit score as they consider them as having low repaying ability. But if you apply for loan with a co-applicant having the high credit score, then it will act as a safeguard for the personal loan approval. If the co-applicant have a good credit report, then the bank will most likely trust your creditworthiness. But you need to keep in mind certain rules and regulations regarding the co-applicant.
- NBFCs – You can opt for a personal loan with low credit score from the NBFCs. Many NBFCs do give personal loan with low credit score in India given the condition that the other eligibility criteria must be satisfied.
- High-Interest Rate – If you have low credit score then it becomes quite difficult to get personal loan. But if you agree for a high-interest rate, then you can easily get personal loan with low credit score.