Are you looking for a personal loan, but your credit score is very low? If yes, don’t worry; you are not the only one. Many people have faced the same problem. Primarily banks and lenders have different eligibility for personal loan. But nowadays, you can easily apply for personal loans with low credit scores by comparing the best personal loan offers and the eligibility criteria.
A credit score is a numerical representation of a person’s creditworthiness, calculated on several factors such as payment history and credit utilisation. Many personal loan providers will use your credit score to determine whether to offer you a personal loan and at what rate. If you’re unsure of your credit score, it is possible to obtain it before applying for a loan. You can check your credit score through Buddy Score. A personal loan can be beneficial to you in times of necessity. But before sanctioning your loan, lending institutions will examine your credit score, which plays a vital role in your loan eligibility. So a low credit score might become a reason for a rejection of a loan or a loan with high-interest rates.
Essential Factors that Help to Get Personal Loan With Low Credit Score
If your credit score is around 650 – 700, there is a probability that some NBFCs will consider you for personal loan approval. Below are the factors on how this happens.
- Adequate Disposable Income -: If you have a stable and high income to repay your EMIs on time, some lenders may consider approving your loan, even with a low credit score.
- Stable Job with Reputed Employer -: If you are an employee of a reputed company, you have a great chance of getting loan approval. When you are a person with a stable employment history, lenders will approve the loan by examining EMI repayment capacity, job stability and the reputation of their employers.
- Select NBFCs and Fintech Digital Lenders -: Even with a stable job and income, if you have a low credit score, it’s not possible for you to get loan approval from large banks and NBFCs. However, some emerging NBFCs and Fintech lenders provide personal loans with low credit scores but with high interest.
- Apply with a Co-applicant or Guarantor -: You can add a family member with a good income and credit score as a co-applicant for your loan application. It will reduce the risk factor as the co-applicant is equally responsible for the repayment of the loan. Hence, your application will get approved.
The main idea is that you should know low credit history is not the end of the world. And, in case you are wondering “how to get a loan with no credit history,” the answer is that you will have to find a bank that doesn’t require a credit check, and they do exist.
Conclusion
Other than these things, you can make a healthy habit of on-time payments and managing your credit in a better way. There are different ways to improve your credit score; one of the first things you need to do is to start paying off your credit cards and debit cards. Try paying off the total amount every month; if you cannot do that because of your low income, start paying at least the minimum. The other thing you can do to improve your credit score is to pay your other debts, like your car loans or any medical bills that you may have. Eventually, you can be eligible for personal loans with a low-interest rate and a choice of your tenure in future. Once your credit score is improved, you can get an instant personal loan from Buddy Loan with low-interest rates.