Having a low credit score makes it difficult to sanction a Personal Loan, but it does not mean you cannot get a Loan. Many lenders, including NBFCs, offer flexible borrowing solutions to cater to people with less-than-perfect credit histories. If you need funds urgently, here are ways to better your chances of getting approved for Personal Loans despite a low credit score:

Use a co-applicant

The most effective way to secure a Personal Loan with a low credit score is by applying with a co-applicant or guarantor. A co-applicant with a good credit profile increases the likelihood of approval. If you fail to make timely repayments, the guarantor is responsible, which reassures the lender. However, make sure that you maintain open communication with your co-applicant, as missed payments will negatively affect both of your credit scores.

Apply with an NBFC

Many traditional lenders have stringent eligibility criteria, but NBFCs often provide more flexible options. They evaluate borrowers based on income stability, employment status, and repayment capability rather than relying solely on credit scores. Suppose your financial records demonstrate steady cash flow and responsible repayment behaviour, and your chances of approval increase. Also, compare NBFCs interest rates, processing fees, and terms before getting a Loan to get the best option.

Show stable income

A lender's primary concern is whether you can repay the borrowed amount on time. You may still qualify for an Instant Personal Loan if you have a low credit score but need to demonstrate a stable income. Submitting salary slips, income tax returns, or any other proof of consistent earnings reassures lenders of your repayment ability. A higher income can offset the risk associated with a lower credit score.

Apply for a lower Loan amount

When your credit score is low, requesting a smaller amount increases your approval chances. Lenders are more willing to provide financing when the repayment risk is minimal. Assess your financial needs carefully and apply for an amount you can comfortably repay. This helps build a better repayment record, improving your credit score. Applying for a smaller loan helps you avoid higher interest rates when you apply for larger loan amounts.

Check your credit report

A low credit score may be due to errors in the credit record. When you apply for a Personal Loan online, examine your credit history for mistakes such as incorrect personal information, duplicate accounts, or misreported payments. If you find any discrepancies, report them to the credit bureau and have them corrected. A slight improvement in your credit score makes a difference in your Loan application.

Conclusion

A low credit score is not a roadblock to securing a Loan. By exploring options such as applying with a co-applicant, choosing NBFCs, demonstrating stable income, opting for a smaller loan amount, and ensuring your credit report is error-free, you can increase your chances of approval. Make sure to borrow responsibly and improve your credit score for a good Loan option in the future.