How To Get Instant Loans Despite Having Low Credit Score

Financial institutions evaluate an applicant’s credit score before approving loans to minimize the risk of defaulting on loan repayments. Credit reports of individuals include information on the mode of repayment, occurrence of defaulting, pre-closure, and the category of previous loans availed.

Lenders usually approve and disburse loan amounts to customers with credit scores of 750 and above. Applicants with lower credit scores are considered as risk factors with higher possibilities of defaulting on loans.

Individuals can still avail an instant personal loan with low credit score by adhering to a set of practices.

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Points to consider to get an instant personal loan with a low credit score

Lenders are apprehensive of borrowers whose CIBIL scores are below 750. These borrowers are categorized as high-risk customers with an increased chance of defaulting on all categories of debt.

Applicants with poor credit score can obtain a personal loan by keeping the following pointers in mind –

Including an additional source of income

Financial institutions approve personal loans for salaried employees individuals whose income levels can be leveraged for loan repayment. Applicants with low credit scores but steady monthly incomes can still attempt to avail a loan with no end-use limitations.

Including an additional source of income through part-time businesses and rents will further increase the repayment capability of an individual. A customer with a secondary source of income shows the financial promise of paying back to the lender, thereby gaining eligibility for a personal loan.

Providing income proof for consistent EMI payment::

Creditors usually demand income proof of applicants through IT Form 16 while acquiring loans. Individuals with higher income levels can thus break the eligibility barrier by being able to sustain repayment by EMI.

A consistent source of income from a high-value employer suggests that individuals are financially capable of incurring the burden of high interest rates imposed.

Maintaining lower fixed obligations to income ratio (FOIR)

Individuals servicing existing loans find it difficult to obtain credit from lenders. As low credit scores include inconsistent or default repayment history on previous loans, individuals should strive to keep FOIR well below 50%.

Customers with low debt-to-income ratio and credit scores can apply for personal loans from financial institutions by posing a minimized risk of defaulting.

Availing lower loan amounts

Applicants have the option to seek lower loan amounts to acquire personal loans with low credit score. Lower principal amounts suggest a lower risk of failed repayments, including interest servicing.

Including co-applicants or guarantors with steady incomes

Application for a personal loan along with a salaried co-applicant or guarantor significantly increases the possibility of securing a personal loan despite poor credit scores. Having a salaried co-applicant in a loan application considerably eliminates the chance of defaulting, as the repayment burden is shared by the applicants.

Collaborating with a co-applicant with a higher credit score will also help individuals get comparatively low interest personal loans from financial institutions.

Checking credit report periodically

Individuals who have completed effective servicing of a previous loan should check their credit reports for discrepancies in the details of repayment. Out-dated credit reports are one of the factors that affect an individual’s personal loan approval due to the lack of information on previous loans and repayment modes.

Individuals with low credit scores benefit from personal loans usually availed from NBFCs. Financial Institutions such as Bajaj Finserv extend personal loans up to Rs.25 lakh with faster approval and disbursal of loan amounts. This company also provides pre-approved offers on financial products such as personal loans, home loans, business loans, and on various other products to ensure maximum time-saving and ease of customers. You can also check your pre-approved offers by providing just your basic details.

An additional source of income and the presence of a co-applicant, among other techniques, will enable an individual to avail a personal loan with low credit score. Note that lenders usually approve higher loan amounts or easier repayment terms or both, in the presence of a co-applicant or a guarantor in case one of the applicants has a low credit score.