Low Credit Score? Learn How to Still apply for a Personal Loan

Whether you visit your lender or apply for a loan via a personal loan app, the first thing that your lender is going to check is your credit score. Well, the reason behind it is that a personal loan is an unsecured loan. This loan is available to you without any collateral or security. So, the only way the lender can be sure of your loan repayment capability is your credit score. Your credit score defines your borrowing history and repayment behavior. If you repay your loans on time and make your payments regularly, then you will have a high credit score and missing out on your payments or going into default can impact your credit score badly.

If you have a poor credit score, the odds of your loan being rejected are rather high. But what if I told you that even if you have a low credit score, you may still get a personal online loan? Well, yes, it is possible to get a personal loan even with a low credit score if you follow the tips, we provide you in this post. So, without any further ado, let us take you to the good stuff!

What Is a CIBIL Score?

The CIBIL Score is a numerical representation of your credit history. Your CIBIL score ranges between 300 to 900. The credit history contained in the CIBIL Report is used to calculate the score which is also known as CIR.

A credit report is a record of a person’s credit payment history across loan types and lending institutions over time. A credit report or credit history of a person changes over time with the way how they deal with their loans and credit card.

What Are the Factors Responsible for a Low CIBIL Score?

Before we show you the tips that can help you get a personal loan even with a low credit score, let us discuss the factors that are responsible for your low CIBIL Score.

  • Too many loans: If you have availed several loans or if you are using many credit cards, your credit score may suffer. Although the impact is minor, it might still drop your credit score by a few points, which can cause a problem in the future.
  • Missing or not making payments on credit cards: Just like an EMI for your loan, not making timely payments on your credit card balances can have a negative impact on your credit history.
  • Reaching the credit card limit too frequently: Reaching the credit card limit too frequently indicates frequent debt and a lack of sound money management, both of which lower your CIBIL score.
  • Having no credit at all: Having no credit at all may sound like a fantastic situation to be in, but it is not if you have no loans or credit cards. This is the case because, without a credit history, you automatically have a credit score of zero, which increases the likelihood that any loan or credit card applications you submit would be denied.
  • Rejection from too many credits card and loan apps: If you apply for a loan or credit card and it is denied, you will likely reapply to that bank and others in the future. These actions lower your grade for two reasons. The first is that CIBIL interprets persistent rejections as a negative indicator, and the second is that your credit scores drop each time a bank asks CIBIL for your credit information.
  • If you do not make full payment of your credit card dues: You might think that making a partial payment of your credit card dues will help you keep the situation under control, but you are wrong here. The true story is that though your consistent and minimal payment may not concern your bank or lender it turns out to be a bad indicator for your CIBIL. In short, outstanding balances are bad for CIBIL and typically result in lower scores.
  • Credit card settlement: Settling a credit card means you are a defaulter, and you have bargained with the bank and canceled a credit card after paying a small amount that was due on your credit card. This has a significant effect on your CIBIL score and can cause a problem in your future loan procedure.

How to Obtain a Loan with Low Credit Score?

You may get a personal online loan even if your credit score is poor by following the tips given below.

Show That You Have a Good Earning Potential

For people who have never used credit before and have no credit history, this could also be effective. Certain lenders may view your application favorably and accept you for a personal loan, despite a poor credit score if you have a reliable and high-income source that provides you with enough monthly discretionary money to cover your personal loan EMIs on time.

Submit a Joint Application

Lender credit risk is decreased when a co-applicant with a steady source of income is included in the personal loan application. As the co-applicant shares equal responsibility for loan repayment, the lender gets double income security on the loan. Adding a co-applicant with a solid credit score would, therefore, help you get your personal loan app accepted.

Show That You Have a Stable Position with a Reputable Company

People who work for reputable corporations, multinational companies, or government agencies are seen to have more income security than others. As a result, lenders may approve the personal loan requests submitted by such candidates, particularly those with a history of reliable work, based on their ability to make EMI repayments, the stability of the job, and the position of the applicant.

Accept a Higher Interest Rate as a Solution.

There are certain lenders who may grant loans to applicants with a bad credit score. These situations involve comparatively smaller loan amounts and higher interest rates, but it guarantees that you may get your loan. You should consider this alternative if you urgently want cash.

Request a Loan with a Security

Lastly, if any of these solutions do not work for you then some lenders may approve your personal loan even if you have a bad credit score on the condition that you put up collateral for your loan. Shares, real estate, fixed deposit accounts, gold, and several other assets are among these collaterals. You can also negotiate on the interest rates if you are putting up a collateral against your loan.


Getting a personal online loan with a low credit score may seem like a dream to many people, but not anymore. Even if you have a low credit score you can still obtain a personal loan both by visiting your lender or by applying through a personal loan app. Just keep the information that we have provided you in your mind and follow the tips to get a personal loan now!

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