How to get a personal loan with a low credit score in India

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The knowledge of how your credit score influences the approval of a loan

A credit score, typically between 300 and 900, is an indicator of your creditworthiness and payment history. In India, all banks and NBFCs look for a minimum score of 750 or more to ensure easy loan approval. With a low score, lenders may be hesitant to approve a personal loan or charge higher interest rates. But a low score doesn't necessarily exclude you—you can still secure a loan through other channels and by putting forward a more robust financial portfolio.

Find lenders that lend to low-score borrowers

Some lenders, especially fintech companies and small NBFCs, target borrowers with zero or low credit history. Such companies use alternative data—your income, employment type, cash flows—to decide eligibility. You can also visit the banks where you have a salary or savings account, as they can verify your transaction history and may be more willing to offer credit.

Use a co-applicant or guarantor

If your credit rating is bad, getting a joint loan with a co-applicant or adding a guarantor who has a good credit history can enhance your prospects of being accepted. The lender feels more comfortable when another person with a good credit standing is behind the loan. Both must be mindful of the shared liability—overdue payment will strike both credit records.

Give something as collateral or apply for a secured loan

A secured loan, such as a loan against property, gold, or fixed deposit, reduces the risk for the lender and is less difficult to obtain with a low credit score. Since the loan is backed by an asset, you will also get better interest rates and approval prospects. Even while applying for a personal loan, offering partial security or post-dated cheques could sometimes make the lender more confident.

Strengthen your application and repayment capacity

Before applying, ensure that your credit report is error-free and correct the same through the credit bureau. Highlight stable income, ongoing job, and lesser current debt to strengthen your application. Lenders may also consider your repayment ability, and not just your score.

With smart application, honesty, and demonstration of financial responsibility, you may still obtain personal loans even with a low credit score—and gradually rebuild your credit record for the future.