Personal loan comes handy to people who have sudden contingency expenses lined up. But getting a personal loan comes with its own set of merits and demerits. One of the crucial factors that banks investigate while granting a personal loan is maintain a good credit score. If your credit score falls within the category of 600 and 700, you are likely to be in the fair to good category. This can still provide you with many options, understanding these options is the first step to secure a personal loan at a reasonable rate of interest. Let us dive inside the article and find the options available. 

What is a Personal Loan? 

A form of unsecured loan offered by bank, credit unions, online lenders, or other financial institutions. What makes it more attractive is the fact that the loan comes without any collaterals and can be secured easily with minimum documentation. It can be used by individuals with minimal home renovations, medical bills or emergencies. The loan comes with fixed interest rates and flexible repayment terms.  

A personal loan works the same way that most of the loans do. All you need to apply for a loan, present the required documentation, and the bank evaluates the creditworthiness before making the loan offer. You can use the funds from the loan for any of your financial needs. But you need to repay them in accordance with the terms that you agree with the bank.  

Pre-Requisites for a Personal Loan 

There are some criteria that needs to be met by individuals while availing a personal loan. These criterion has to be met by both salaried and self employed professionals.  

Age: The minimum age for salaried applicants must be between 21 and 25 years old and the maximum age needs to be 58 years old. The minimum age for self employed applicants is 28 years old and the maximum age is said to be 65 years old but some banks might refuse to give loans for individuals who are above 58 years old. 

Income: A higher income always implies that the repayment chances are higher on the part of the borrower, the risk on the financial institution lending the loan will be minimal. The minimum salary requirement that is set for salaried individuals is Rs. 15,000. But most lenders prefer borrowers who have a salary of Rs.25,000 and above. In case of self employed professionals lenders require individuals with a gross income  of Rs. 2 Lakhs and more.  

Credit Score: A high credit score helps individuals to get personal loans at better interest rates. A good credit score is equally important to become eligible for the loan. 

Employment: Any financial institution looks for an employed professional with a minimum salary service of around 2 years when giving a personal loan. In the case of self-employed professionals, they should have run the business for at least five years. 

Debt-Income Ratio:  Financial institutions calculate the Debt-Income ratio to determine the amount of money you can repay as EMI for the loan that is borrowed by you. This Debt-Income ratio or DTI as it is called is one of the critical measurements to determine your creditworthiness in the eyes of financial institutions. It also determines how responsible you are while repaying your debt. 

Residence: You need to be a resident of India with a valid residential address in order to procure a personal loan from any financial institution. 

Other Requirements: Bankers or any financial institution for that matter check for the other factors such as the city and the area of residence, the organization you work for, past loan repayments, credit card payments, bill payments, and so on. 

Documents Required for Personal Loans 

The following are some of the documents that are required by financial institutions while applying for a loan. They are: 

  • Identity Proof: Some of the documents that are accepted as an identity proof include Passport copy, driving license, Aadhar card, voters ID card 

  • Address Proof: The above mentioned document can be used for address proof as well. 

  • Bank statement for a minimum of three months is accepted to get personal loan from any financial institutions. 

  • Three latest salary slips along with the current dated salary certificate with Form 16. 

  • Latest Passport Size Photographs 

Strategies to Boost Personal Loan Eligibility:  

Good Credit Score: Financial institutions prefer borrowers with a higher credit score. Always keep your credit score above 700 this will help you to pay bills on time, reduce credit card balances, and avoid credit inquiries. 

Stabilize Employment: Financial institutions also take into account the employment history and stability while evaluating personal loan eligibility. Lenders also hesitate to give loans to individuals who have an instable career.  

Adding a Co-applicant: Adding a close family member like a spouse, parents, children, etc. can also increase your chance of getting a personal loan. 

Avoid Unnecessary Credit Applications: Applying for multiple loans or credit cards within a short period might lower your credit scores. When you apply for a loan, banks will fetch your credit report from the credit bureau to evaluate your creditworthiness. A  

Offer Collateral: If you are struggling with loan eligibility, consider offering collateral to secure a loan. This will make the financial institution risk of securing a loan for themselves. 

5 Best Personal Loans for Credit Scores in Range of 600 

Some of the best personal loan providers with a credit score range of 600 are listed below: 

HDFC Bank Personal Loan: 

HDFC Bank Personal loan interest rates start from 10.85% p.a. HDFC Bank approves any personal loan application based on income, employment status, and creditworthiness of the applicant. HDFC Bank gives you an XPRESS personal loan up to an amount of Rs. 40 Lakhs. This can be repaid through pocket-friendly EMIs across flexible tenures. The bank provides you with a fully digital and streamlined application process to help you to access funds from anywhere. Some of the notable benefits of the personal loan include: 

  • Collateral Free Loan: Applicants can avail of the loan facility without any collaterals. 

  • Quick Disbursal: The loans are disbursed quickly within 10 seconds to 4 hours of time. The loan amount is disbursed on the same day or the day after the submission of the requisite documents. 

  • Competitive Interest Rates: HDFC Bank personal loan can be availed at an attractive interest rate if you are an existing customer who has a good credit score.  

  • Loan Tenure: The tenure of the loan ranges between 1 to 5 years with an easy EMI repayment option. 

Charges 

Amount 

Interest 

10.85% to 21.00% 

Loan Processing Charges  

Up to Rs.6,500 GST 

 

Pre-Payment Charges/Part-Payment Charges 

13-24 Months – 4% of Principal Outstanding 
25-36 Months – 3% of Principal Outstanding 

> 36 Months – 2% of Principal Outstanding 

Overdue EMI Interest 

2% of the EMI amount 

 

Bajaj Finserv Personal Loan: 

Bajaj Finserv helps you to avail a personal loan starting from 20,000 to 55 Lakhs and manage it with ease. You will get an instant loan approval within a span of 5 minutes digitally from the comfort of your home. The loan amount is also disbursed as easily within a span of 24 hours, either on the same day or the next day of the loan approval. The loan can be repaid on monthly EMIs on a flexible tenure of 12 months to 96 months. Some of the notable benefits of the loan includes: 

  • Collateral Free Loan: You do not have to provide collaterals like gold ornaments, property papers, or someone to have you as their guarantor. 

  • No Part-Prepayment Charges: You can repay a part of the loan in advance at no extra cost. You can also part-pay as many times you want. 

  • Unique Variants: Customers have the flexibility to choose the loan as three different variants. They are: Term loans, Flexi-Term loans, and Flexi Hybrid loan.  

 

Charges 

Amount 

Interest Charges 

10% to 31% p.a 

Loan Processing Charges 

Up to 3.93% of the loan amount 

 

 

 

ICICI Bank Personal Loan: 

ICICI Bank personal loan interest rates starts from 10.85% p.a. Customers can also avail the Line of Credit Overdraft facility and pay interest only on the amount you use and the period you use it for. You can apply online for a personal loan up to Rs. 50 Lakhs. The repayments can be easily handled through the lower interest rate and flexible tenure that the bank offers. The tenure ranges between 12 to 72 months.  The approval process for the loan is quick and you can avail the required financial flexibility in case of emergencies, or house renovations.  Some of the key points to be noted in the personal loan includes: 

  • Fixed Interest Rates: Customers can enjoy the benefit of stable and predictable interest rates that can ensure consistency in their monthly payments.  

  • No Foreclosure Charges: There will be no foreclosure charges applicable on your loans. The condition is that the customer needs to have paid a minimum of 12 EMIs before the foreclosure. 

  • No Hidden Charges: There are no hidden charges that are applicable all the fees are disclosed beforehand for transparency purposes. 

Charges 

Interest 

Interest Rates 

10.85% to 16.65% p.a 

Loan Processing Charges 

Up to 2% of the loan amount with some additional taxes 

Overdue EMI Charges  

5% p.a of the EMI amount  

 

RBL Personal Loan: 

One of the oldest private sector banks in India is the RBL bank. It is one of the fastest growing private sector banks in India. RBL bank offers its services in five sectors. It includes agricultural development banking, commercial banking, corporate banking, institutional banking, and retail banking.  Personal loans offered by RBL is customized for our existing customers with salary and savings account. The bank offers a loan amount of up to 5 lakhs at a competitive interest rate of 18%. One of the main key takeaways of the loan is they provide a hassle-free loan sanction and disbursal procedure. The loan is available only for salary account holders or corporate salary account holders. The age of the borrower needs to be between 25 years to 55 years old. 

Some of the key features of the loan include: 

  • Flexible Tenure: The loan is offered at a flexible repayment tenure of 12 months to 36 months. 

  • Loan Documentation: Simple Loan documentation with attractive interest rates. 

 

Charges 

Interest 

Interest 

18% p.a 

Processing Fee 

2% of the loan amount 

Late Payment Fees 

Late payment fees of 3% of the EMI amount 

Foreclosure Charges 

  • Preclosure Charges of 5% of the loan amount is charged on the outstanding principal if it is made within 18 EMIs 

  • Preclosure Charges of 3% of the loan amount is charged on the outstanding principal if it is made after 18 EMIs 

  • No Foreclosure Charges if a minimum of 12 EMIs has been made without any default  

 

IIFL Personal Loan: 

IIFL Finance offers customized personal loans that are approved digitally. This is done to make the approval process easier and stress-free for customers. The financial institution's digital approach sets it apart rather than going through a set of complex documentation processes. The financial institution also creates customized EMI options that align with the monthly budget and a loan tenure of 42 months. The loan amount ranges from Rs.5,000 to Rs. 5,00,000. So, take a step towards IIFL Personal loans with a seamless application process you can apply for the loan from anywhere and anytime. You will receive funds quickly in your account. Some of the attractive pointers with IIHL loans includes: 

  • Instant loan disbursal: IIFL Finance approved the loan within a matter of few hours with the most minimal documentation needed. 

  • Part-Payment Options: Users have the flexibility to make part-payments of the loans  

  • Flexible Repayment Options: 

Charges 

Interest 

Interest 

12.75% to 44% p.a 

Processing Fees 

2% to 9 % with an additional GST 

Late Payment Fees, Penal Charges 

24% + GST 

Foreclosure Charges 

 

Frequently Asked Questions  

  1. Can I get a personal loan for a Credit Score of 600? 

Yes. It is absolutely possible to get a personal loan with a credit score of 600. Though the options are limited with a higher rate of interest when compared with individuals who have a higher credit score. 

  1. What types of personal loans are available for credit scores between 600 and 700? 

There are several types of loans available for credit scores between 600 and 700. This includes loans from credit unions, online lenders, traditional banks, and so on. Each one is different in its terms and interest rates. It is always a best practice to compare them and get them. 

  1. What are the general interest rates for which personal loans are granted for an individual maintaining a credit score between 600-700? 

Interest rates for personal loans with a credit score of 600-700 range between 11% to 35%. However, the exact rates depend on the lender and your credit profile.  

  1. Do borrowers need to pay any other fees apart from the interest they pay for the personal loans? 

Yes. There are other fees that come with the loans like late payment fees, prepayment penalties, and so on. It is always a wise habit to go through the loan agreement to find out any hidden fees that is associated with the personal loans.  

  1. How can I improve my chances of getting the personal loans approved with a credit score of 600-700? 

One needs to maintain a stable income, reduce the existing debt, and pay their bills on time. These are some of the prerequisites required to get your loan approved. 

  1. What should I consider before applying for a personal loan with a credit score of 600? 

You need to decide the loan amount you might require, the interest rates offered, any associated fees that comes along with the loan, and your repayment ability. Besides, it is always a good practice to check whether you can qualify at a potential lower interest rate.