Tips to Get a Personal Loan with Low Credit

If you’ve ever borrowed a personal loan before, you’ll know exactly how important your credit score is for your personal loan’s approval. Your credit score is the gold standard against which all lenders across the country evaluate your loan approval. They use this to decide how risky it would be to sanction your loan. If you have a high credit score, you’d be a low-risk applicant for your lender. If your credit score is low, you’d most probably represent a high-risk proposition for your lender. Your credit score is a three-digit number that illustrates how financially responsible you are. It summarises how much credit you’ve availed of until now, your repayment behaviour, and your credit history. By now, you must be thinking that applicants with a low credit score cannot get a personal loan. But that’s not true. Here are four tips you can try to get a personal loan despite a low credit score:

1.Prove That You Have Good Repayment Capacity

When it comes to getting a low credit personal loan or any personal loan for that matter, what’s most important to your lender is timely repayment. You must prove to your lender that your current income can support the EMI payments and that too on time. If you’ve received a salary hike or a bonus at work (however small), use that to your advantage. This may prompt your lender to consider your loan application. If you can prove that you have a steady job & a regular source of income, your low credit personal loan may be approved, albeit at a higher interest rate.

2.Start with a Smaller Loan Amount

As you may know, a personal loan is already a risky proposition for any lender because of the lack of security or collateral. That means if you default on your loan EMIs, your lender doesn’t have a security blanket to fall back on. So, if you have a low credit score on top of this, asking for a big loan amount is not advisable. If you do, it’s more a sign of you defaulting on your loan EMIs. Suppose you apply for a low credit personal loan with a smaller loan amount. In that case, your chances of loan approval are higher, as a smaller amount is always easier to repay. And if you repay it in full, your lender will feel more comfortable granting you a bigger personal loan in the future.

3.Apply with a Guarantor

Some of you may still feel shaky or unsure about applying for a personal loan with low credit score by yourself. In that case, you can involve a guarantor as well. A guarantor is someone who promises to pay off the debt in full, in case you default on the low credit personal loan. To achieve this, they pledge their own assets against the loan. Of course, it is not always easy to find an individual who agrees to be your guarantor. They need to provide their KYC documents and signatures as well. But if you do find one, it will increase your chances of getting a low credit personal loan.  

Wrap Up

If you have a low credit score and need to borrow a personal loan, we hope that you will try following the points as mentioned above. It will help you get a low credit personal loan easily. Just remember to repay all the loan EMIs on time, no matter what. Closing the loan successfully after servicing all your EMIs will build your case for higher loans in the future.


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