How to get a loan even with a Poor Credit Score?

Juliet D'cruz

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How important is a good credit score to get a loan? Can I get a loan if I have a bad credit score? What are the alternatives for an individual with a poor credit score? Let’s answer all these questions and more via this article. 

Individuals might need to take different kinds of loans during their lifetime; an education loan to study in that top university, a car loan to buy your dream SUV, personal loans to fund their marriage, and a home loan to buy their dream home. 

Getting a loan is a tedious process. There are so many eligibility criteria one has to fulfil to get a loan. Of all the criteria to get a loan, your credit score is an important parameter that decides the loan amount, your interest rate and various other terms and conditions of your loan. So it is important to achieve and maintain a high credit score if you want the best loan. 

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What is a credit score? How does it impact my chances of getting a loan?

Your credit score is a 3-digit number that reflects your creditworthiness. It’s based on your credit history, which is taken from information in your credit report’s ‘Accounts’ and ‘Requests’ sections. It usually falls between 300 and 900. The closer your credit score is near 900, the more likely your loan application will be approved.

CIBIL™, Equifax, CRIF High Mark, and Experian are the four recognized credit bureaus in India. A person is entitled to one free credit report every year. You have the option of requesting a credit report and credit score from any of the four credit bureaus.

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How to get a loan if you have a poor credit score?

A low credit score indicates that you are a risk to the lender. A good credit score indicates that the borrower will make timely payments. How well you’ve repaid previous loans, whether you’ve defaulted or pre-paid any loans, the types of loans you’ve taken, and how much of your income goes toward loan repayment all contribute to your credit score.

So, while you may be able to locate some lenders ready to give you money, you can expect to pay a high-interest rate if you have a negative credit score and urgently need a loan. These lenders demand extremely high-interest rates, ranging up to 30% to 40% per year.

Yes, it will be difficult for you to obtain credit with such a poor credit score, but it is not impossible. Before you start the loan process, you may take a few basic measures to make sure everything is in order.

Prove to the lender that you can make all the EMI payments on time

Even if you have a bad credit score, a raise in salary or an additional source of income can benefit your loan application. Furthermore, if you can establish that you have a stable job with a reliable income, your chances of getting a loan will improve. Please keep in mind that the interest rate may be higher. 

Along with your credit score, many lenders take into account additional factors such as your present income or other sources of income. If you have a bad credit report, you can always offer bank statements demonstrating an increase in your pay, an annual bonus, or other additional sources of income. This implies that you can return your debt ably. 

Demonstrate that you’ve made timely payments on your present debts

Your CIBIL™ score is determined by how quickly you repay your current loans. Your credit score will be affected if you default on a loan or EMI payment. Ensure that all delinquent debts, such as credit cards, loan EMIs, and utility bills, have a record of payments before applying for a new loan. This can help you improve your credit score and raise your chances of getting approved.

Go for a lower loan amount

Consider asking for a lower loan amount if your credit score prevents you from getting the loan amount you want. When you apply for a large personal loan with a poor CIBIL score, your lender will consider you a high-risk candidate. From the lender’s perspective, your chances of failing on the loan repayment are higher. If the personal loan amount is lower, the lender is more likely to approve the loan request. Furthermore, repaying a lower sum would be considerably easier. 

Take out a secured loan

Personal loans and credit cards are both unsecured loans with strict qualifying requirements. For your loan, provide some form of collateral or guarantee. This will reassure the lender about your repayments, allowing them to easily approve your loan. Collaterals such as gold, property, government bonds, and so on can be pledged.

You could add a co-applicant to your loan application 

You can also choose a co-applicant or a credit ratings guarantor to expedite the approval process. Ensure that your co-applicant or guarantor completes the KYC processes by signing the required paperwork with the required signatures. The lender will almost probably agree to sweeten your loan deal if you have a co-applicant or guarantor with a good CIBIL score.

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Examine your credit report for inaccuracies and correct them

There’s a chance your credit report contains errors or misreporting. This is most likely due to the fact that your information hasn’t been updated with the most recent information. If you fail to meet even one of the criteria, your credit score will suffer. However, if your credit report contains any unfavourable information, there are steps you may do to rectify it. Check your credit score on a regular basis and report any mistakes as soon as possible. 


Maintaining a good credit score necessitates disciplined credit management. Despite the many lists of “eligibility standards” for loans and credit cards that we hear about, your “credit score” is the most important factor in establishing your eligibility. 

Although a low credit score indicates a borrower’s poor creditworthiness and makes obtaining a loan difficult, there are some options for obtaining a loan despite a low credit score. While you won’t be able to immediately boost your credit score, these steps will have a substantial impact. 4-12 months is a reasonable time frame for rebuilding your credit score. To get a good credit score, you’ll need patience, determination, and self-control.