Loans for Low CIBIL Score

Personal Loans for low credit are an option for people whose credit reflects some financial missteps or people who haven’t had time to build a credit history. Bad/Low credit refers to a low credit score or a short credit history. Things like late payments or maxed-out credit cards can lower your credit score. Many lenders are hesitant to lend to people who have a low credit score as there is a higher risk of them defaulting on the payments. A low credit score is an indication of the low repayment capacity of individuals and hence, these individuals find it challenging to find a lender who will offer them a loan.

What makes up a Bad Credit Score?

FICO calculates your credit score using five pieces of information:

If your finances fall short in one or more of these areas, your score will drop. For instance, having a history of late payments will have a huge impact on your score, since payment history contributes the most to your score. Things like bankruptcies, foreclosures and high amounts of debt relative to your income could also result in a bad credit score.

Things to keep in mind before you availing Low Credit Personal Loan

Before you decide to availing bad credit loan, ensure that you bear the below-given points in mind:

How to get a Bad-Credit Personal loan?

Getting a personal loan with bad credit isn’t impossible, but it requires diligent research to find the most affordable loan possible. Here are a few steps to get a personal loan if you don’t have strong credit.

  1. Check your credit score: Learn where your credit stands by requesting a free credit report from com. You are entitled to one free credit report every year from each of the credit reporting agencies, though you can currently access weekly reports through April 2022.
  2. Ensure that you can repay the loan: Evaluate your home budget to make sure that you can support an additional monthly loan payment.
  3. Compare bad-credit personal loans: If you have an existing relationship with a bank or credit union and your accounts are in good standing, it may have a personal loan option for you. You can also research personal loans for people with bad credit online, but make sure to read the fine print and independent reviews about the lender.
  4. Take advantage of prequalification: Before you apply for a loan, many online lenders allow you to prequalify, or check whether or not you will qualify without doing a hard credit check. This is a good way to shop around for a bad credit loan without impacting your credit score further.
  5. Look into secured loans: Some lenders offer secured personal loans, which are often easier to get if you have below-average credit. These loans must be backed by an asset like your home or car, but they typically have lower APRs.
  6. Add a co-signer if necessary: Co-signers take on partial responsibility for the loan and may be required to repay the loan if they fall behind on payments. Adding a co-signer who has good credit could help you qualify and may net you lower interest rates.
  7. Gather financial documents: When applying for a loan, you’ll likely have to provide financial documents that include pay stubs, tax documents, and employment information. By gathering all of these documents in advance, you’ll speed up the process of acquiring your loan.
  8. Be prepared for a hard credit check: While you can get prequalified from many lenders without initiating a hard credit check, the actual application will result in a credit inquiry. A hard credit check can temporarily damage your credit, though you should be able to recover the points lost once you begin making payments on the loan.

How to increase your chances to Secure a Bad Credit Loan

Top 5 Lenders for Low CIBIL Score

1. Omozing

Omozing helps make Smart Money Moves for a Lifetime. They strive to get lowest interest rates and best terms for your Online Applications at . Personal Loan Interest Rates starting from 0.8% p.m, and Loan amount ranging from INR 10,000 to INR 15,00,000. The Minimum and maximum repayment period ranges from 1 month to 48 months.  CIBIL 600+ all company categories (including LLP, Self Employed, Proprietorship)

Personal Loan Eligibility and Documents

Documents Required

(Valid Driving License / Valid Passport / Aadhar Card)

Eligibility Criteria

2. HDFC Bank Personal Loan 

HDFC Bank is one of the premier banks in India with a wide variety of credit products to cater to all your needs. It offers personal loans to individuals with a credit score in the range of 600-700. The main features of the loan are: 

Documents required  

The Rate of Interest and Processing Fees 

Interest Rate: 10.50% – 21.00% p.a 

Processing fee: Up to 2.50% of the loan amount subject to a maximum of Rs.25,000

3. State Bank of India (SBI)

SBI offers SBI Saral personal loan customized in a manner that helps an individual meet varied kinds of personal expenses. The interest rates at which these loans are offered are quite competitive with no hidden costs or administrative charges, no prepayment penalties. It also comes with easy repayment term.

Eligibility for SBI Personal Loan

The eligibility criteria you will have to fulfil in order to avail this personal loan scheme are:

SBI Personal Loan Details

Interest Rate – 9.60% p.a. onwards 

Loan Amount – Up to Rs.20 lakh

Minimum Income Required –Rs.15,000 

Loan Tenure – Up to 6 years 

4. AXIS Bank Personal Loan

Axis bank’s personal loans are meant for salaried persons, self employed individuals and also professionals. The processing of the loan is simple with easy documentation and fast approval.

Axis Bank Personal Loans offer fast processing of your loan. Personal Loans can be used for plenty of purposes! They can be availed when you are planning a vacation, renovating your home or arranging a dream wedding for yourself or somebody special in the family. Now you need not postpone things on your bucket list! You can get a Personal Loan from Rs. 50,000 upto Rs. 15,00,000 with minimal documentation and speedy approval from Axis Bank. Also, you can transfer your existing high interest Personal Loan to Axis Bank as well. With a quick approval on Personal Loans, turn your dreams into reality!

Axis Bank Personal Loan Benefits

5. Fullerton Personal Loan 

Fullerton India is an NBFC established in the year 2007 and since then have been catering to the credit needs of individuals and small businesses alike. 

Features of Fullerton Personal Loan 

Documents Required 

The Rate of Interest and Other Charges 

Interest – 11.99% – 36% 

Processing Fee – 0% – 6% of the loan amount

Ways of getting Personal Loans for Bad Credit

1. Prove that you can afford the EMI’s

Right after the credit score, it is income that is considered by the lender. One of the ways of getting personal loans for bad credit is by proving that you are eligible and capable of the EMI payments. If you are able to convince the lender that you have a regular and stable job, the chances for approval are higher.

2. Apply with a co-signer or secure a guarantor

Personal loans for bad credit can also be achieved with the help of a co-signer or guarantor. Applying with the help of a co-signer will make the lenders consider the co-signer’s credit score, thus improving your chances of approval. Similarly, securing a guarantor will increase the confidence of the lender that you will not default on your loan payments.

3. Pledge collateral

Another secure way of personal loans for bad credit is by pledging collateral. Collateral is just like a guarantor except it is an asset that is attached with the loan. On failure of payments, the lender has the right to sell the collateral and realise it to get back the loan amount.

4. Ask for a lower personal loan amount

If you have a poor credit score, the chances of approval for any kind of loan are less. However, personal loans for bad credit can be possible if you ask for a lower personal loan amount. This will further reduce the risk of borrower default as the lender has to give a lesser amount.

5. Correct the mistakes on the credit report, if any

A lot of times, errors and mistakes on the credit report can lead to a poor credit score, thus affecting credit possibilities. Check your free credit report online once a year to see if there are any errors or mistakes that you must report.

Alternatives to Bad Credit Loans

There are limited alternatives that you can consider before opting for a bad credit loan. These options are:

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