Your credit score and credit history is the first thing that a lender checks when you apply for a loan. This is why having a good credit score matters a lot. That said, personal loans for people with low credit scores are available, and you can get one by following the strategies listed below. 

A personal loan can be of great help when you need funds in a hurry. But before such a loan is sanctioned, you will have to meet various eligibility criteria set by the lender. The eligibility criteria vary from one lender to another. You can check with your bank to see if you clear the eligibility criteria for a personal loan. 

While it may not be as easy to get a personal loan with a low credit score, you may be able to get one with some effort. But first, let’s get an understanding of what a credit score is and how it affects your eligibility for a personal loan.

How important is a good credit score?

Your credit score represents your creditworthiness. Credit Bureaus are agencies authorized by the Reserve Bank of India (RBI) to calculate the credit score of an individual. A valid credit score falls in the range of 300 to 900, with 900 indicating most creditworthiness. The higher your score, the higher is the chance that your personal loan application gets approved and you enjoy better interest rates on the sanctioned loan. 

Your credit score depends on several factors like repayment data on your existing debts, debt-to-income ratio, mix of debts, length of credit history and more. Making a timely payment on all your outstanding debts like your credit cards, loan EMIs, etc. will take care of your credit score. However, defaulting on loan repayment will result in your scores to take a hit. 

Personal loans for individuals with a low credit score are more likely to be rejected than for individuals with a healthy credit history. A high credit score of 750 or more makes you a highly prefered candidate for any type of loan. Conversely, a personal loan for a credit score of 650 or less may lead to rejection or a higher interest rate as you may be considered a ‘high-risk’ borrower, depending on the lender’s policy.

Your capacity to repay won’t solely depend on your credit score but will also be judged by various other factors such as bank balance, job security, etc.

Ways to get a personal loan with a bad credit score

Even though it is difficult, you can still get a personal loan with a poor credit score by taking the measures listed below:

1. Apply for a low personal loan amount

Your lender may acknowledge you as a high-risk candidate if you ask for a high loan amount with a low credit score. The probability of you defaulting on the loan repayment is higher according to the lender’s point of view.

To offset this, try to borrow a lower loan amount. Since, the loan amount is less, and you can repay it within a short tenure, the lender is more inclined to grant the loan request.

2. Request Your Lender to Consider Your Case with an NA or NH in Your Credit Report

If there is an inactive credit period for the last 3 years or no credit period during the same time then this will be marked by an NH or NA on your credit report. This translates into you not having a credit score at all in your credit report. Get in contact with your lender and explain why there is a period of credit inactivity. Sometimes lenders may consider your request, and approve the loan. But, beware you may be charged higher interest rates than usual. 

3. Show Evidence of Income to Support Loan Repayments

You may have a low credit score but with a higher salary or showing proof of an additional income source can make the lender more favourable to your loan application. Moreover, if you can show evidence that you have a stable job with a steady income flow, the more likely of your loan getting approved. But note that you may be subjected to a higher rate of interest.

4. Get your credit report errors resolved

Are you having a hard time getting a personal loan because of your low credit score? Have you checked whether the low credit score is due to misreporting or errors on your credit report? It is highly possible because your record hasn’t been updated with the latest information, your credit scores may have taken a hit. 

Sometimes it is not really your fault, however mistakes such as these can cause unwanted issues. To resolve the issue, regularly check your credit score. If you find any errors in your credit report, then make sure that you report them and resolve them quickly. 

5. You can apply for a joint loan or get a guarantor

If you have a low credit score, then getting a co-applicant or guarantor with a good credit rating can help you get the personal loan faster. With permission from your co-applicant or guarantor, make sure that the KYC formalities are completed along with the required signatures on the relevant forms. When the lender sees a co-applicant or guarantor with a good credit score on your loan application, then they might consider offering you a better deal.

6. Opt to Pledge a Collateral

Personal loans are unsecured, meaning you don’t have to provide any collateral. However, you can volunteer to pledge a collateral to improve your eligibility chances, especially when you have low credit scores. However, ensure that you have a solid repayment plan. If you default on the repayment, you risk losing your collateral. 

Use an Eligibility Calculator to Determine your Eligibility for a Personal Loan with a Low credit Score

Your credit score is an important part to be eligible for a personal loan. However, there are also various other factors which play a key role in your loan application being approved.

  • Use a personal loan eligibility checker to get an estimate of the loan amount you can avail, and the EMIs that you can expect to pay.
  • You should check your credit score. This can be easily done online for free on the CreditMantri website. A medium to good (650-850) credit score increases the chances of a personal loan being sanctioned. With a low score, you may still be eligible to get a loan but will be charged a higher interest rate.

If you are looking for a personal loan with a low credit score then your best try is to approach NBFCs and digital lenders, because they have more flexible eligibility criteria when compared to banks. If you have defaulted on a loan in the past for genuine reasons, then make sure that you explain the reasons for it clearly to the lender. As long as the reason is genuine then the lender may consider offering you the personal loan at a lower interest rate.


While these measures can certainly help you get a personal loan even with a bad credit score, you still need adequate funds to repay it on time. If you default on the loan, your credit score will plummet further down. However, it’s highly recommended that you first work on boosting your credit scores so that it improves your chances of securing the loan and lowers the interest rates.