You must have a credit score of 640 or higher to qualify for a personal loan of Rs. 20,000. If you have a poor credit history, you may not qualify for low-interest rate personal loans. However, to rebuild your credit, you will have to pay higher interest rates and make timely repayments.
How are personal loans & credit scores interrelated?
A personal loan is an unsecured loan lent by banks and lenders for an individual’s personal needs. A personal loan can be borrowed for various reasons such as a holiday, home renovation, wedding expenses, medical emergency, etc.
A credit score acts as proof of an individual’s creditworthiness. This score falls between 300-900 and the higher the score, the higher one’s chances of personal loan approval. The majority of personal loans in India are offered to candidates with a credit score above 750. An applicant with a poor or low credit score is considered a loan defaulter and there are high chances of future loan defaulting on his/her part.
Getting a personal loan with a low credit score
Here are some tips to get a personal loan with a low credit score:
- Submit proof of high and stable income to the lender. This assures the lender of your repayment capability.
- Opt for a lower personal loan amount such as Rs. 20,000 at once. This can be low risk for the bank or lender, and they may easily approve the loan amount despite a low credit score.
- Applying with a co-applicant who has a good credit score can also improve the chances of loan approval.
No matter the loan amount, a good credit score is always desired by banks and lenders. Therefore, a personal loan applicant must work towards maintaining a good credit score.