An instant Personal Loan serves as a reliable financial solution during emergencies, providing quick access to funds when you need them most. Although they are easy to obtain, lenders consider several factors, including your credit score, when evaluating your eligibility. But what if your credit score is not up to the mark? If you have a low credit score but need funding for a planned or unplanned expense, Lenders can provide instant loans online even with a not-so-perfect credit score. Let’s see how.
What is the Credit Score?
The credit score is a 3-digit number ranging from 300 to 900, representing your past credit behaviour. A high score attracts faster and easier loan approvals with better rates and deals. While most loan companies check this number to assess your credit risk before approving a loan, no specific credit score requirement as part of its Personal Loan eligibility criteria.
Importance of Credit Score
The credit score is a crucial factor that most lenders use to assess your creditworthiness when you apply for a loan or credit card. Here’s why:
- Loan providers use it to evaluate your credit risk.
- A higher credit score attracts better loan terms at lower interest rates.
- A low credit score makes credit costlier and difficult to access.
How Do Instant Loans Online for Low Credit Scores Work?
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instant loans online considering additional factors beyond your credit score, making financing accessible even with low credit scores. These include your income, repayment capacity, employment stability, financial obligations, etc. Applying for a smaller loan or a shorter repayment period can help you get a better deal on Personal Loans. Repaying these loans on time can help improve your credit score over time, boosting your Personal Loan eligibility for future applications.
Tips to Get a Personal Loan with a Low Credit Score
Just because you could not manage credit in the past does not mean you cannot obtain loans in the future. Here are a few tips you can use to make things work in your favour when applying for a Personal Loan with a low credit score:
- Ask for a Smaller Loan Amount: Although instant loans online from Rs 50,000 to Rs 5 Lakh, consider applying for a smaller loan amount if your credit score is low. Since approving a considerable amount may be risky for the loan provider, you can easily qualify for a smaller loan amount if you fulfil other eligibility criteria. Furthermore, it will make repayment easier for you.
- Prove Income Stability: It can approve your loan if you have a stable job and can repay the EMIs consistently. A stable job with regular income improves your financial capability and boosts your chances of loan approval. Provide evidence of a stable income source, which indicates your repayment capacity and increases your approval chances.
- Add a Co-Applicant: Consider applying for a loan with a co-applicant to enhance your Personal Loan eligibility. Add a spouse, parent, or relative with a healthy credit score to improve your chances of approval and get a loan at lower interest rates and better terms and conditions.
- Pledge Collateral: While Personal Loans are unsecured, you can still provide an asset as collateral to secure credit. Pledging security against a loan improves eligibility by reducing the lender's risk.
How to Improve Your Credit Score?
Use these tips to improve your credit score and get the best loan deal:
- Pay your EMIs and credit card bills on time to boost your credit history.
- Reduce your credit utilisation ratio by keeping your credit usage below 30% of the available limit.
- Avoid frequent loan applications that can harm your credit score.
- Check your credit report for inaccuracies and rectify them.
- Maintain a balanced mix of secured and unsecured loans.
Improving your credit score fetches better loan options in the future. However, if you need money now but have a low credit score, use the above tips to get one easily. Anyone who fulfils the Personal Loan eligibility conditions can apply for a loan. It also gives you a chance to improve your score with consistent EMI payments.
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