However, even if your credit score is low, there is no need to panic. There are some methods from which you can get a loan, just a little understanding and preparation is required.
What is credit score and why it is important
Credit score is a three -digit number, which gives information about your entire credit history. With the help of this number, the lender decides how reliable borrowers you are. This score is usually between 300 and 900. The score above 750 is considered good, while the score below 600 is considered weak.
If your score is low, the bank or lender may consider you risky. In such a situation, he can either reject the loan or will give a loan on a lot of interest rate and strict terms. Therefore, improvement of credit score can prove beneficial before taking a loan.
Take personal loans in a low credit score too
If the credit score is low then there are some ways, which can increase the chances of getting a loan.
Apply for low amount
If you apply for a higher amount with less score, then the lender feels more risk. Therefore, it is better that you apply for small amount, which will increase the chances of approval and the repayment will also be easy.
Show income stability
If your salary has recently increased or you have an extra income source, then definitely tell it to the lender. A stable income strengthens your loan eligibility.
Add coal-applicant
If your score is low, then you can take the loan with a co-applicant whose score is good. By doing this, the loan can be approved quickly and the interest rate may also be slightly better.
Keep the option to give collateral
Personal loans are usually unsecured, but some lender collaterals are ready to be taken. If you are willing to give any security, then the chances of getting a loan increases.
Credit score is made with these things
It is also important to know what your credit score is made from:
Payment History – If you have paid EMI or credit card on time, then the score will be good. Late or missed payment damage the score.
Borrow money – How much money you have borrowed, it also affects it. If there is a borrowing close or more of the limit, the score may fall.
Credit History – The longer the long and clean record history is, the better score is made.
Different credit products- If you have handled different products like credit cards, personal loans and home loans properly, then the score is good.
Recent Credit Activity – How many new loans or cards you have recently applied, this factor also affects the credit score. More inquiies can bring the score down.
Can apply easily with digital platforms
If you want to see different loan offers together, digital platforms like Moneycontrol can help you. Here you can apply for personal loans without any paperwork. The interest rate starts at 10.5% annually and you can take a loan of up to 50 lakhs. For this, just three easy steps have to be completed – fill your details, complete KYC and set EMI.
conclusion
Overall, a personal loan can be found even if there is a low credit score, it is necessary to adopt the right way. Steps like choosing a low amount, showing stable income, adding coal-applicants or offering collateral can help you. You can also get a loan by being a little conscious and can also improve your credit score.
Summary
A good credit score increases the possibility of your personal loan approval, but you can also get a loan with a low score. In this article, we have given some tips to get personal loans with low credit score.
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Disclaimer
This fraction/article is written by an external partner and does not reflect the work of the editorial team of Moneycontrol. This may include references to products and services offered by Moneycontrol.