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Lowest credit score for personal loan: Here’s what you must know
22 January, 2025 | 11:01 IST

India’s personal loan market is growing and the access to loan offers has become quite convenient with the rising number of instant loan apps. Borrowers are opting more for personal loans over other credits due to the convenience of flexibility and hassle-free application process.

These loans do not come with any restrictions on end-use, meaning borrowers can use the money however they like. For availing a personal loan two factors are most crucial— income and credit score.

Though the eligibility criteria and terms and conditions for personal loans may vary from lender to lender, most of the borrowers need to have a stable income and a high credit score.

While the credit score is the most important factor to avail a personal loan, many borrowers with a low credit score often wonder about getting approval for their loan applications. Can you get a personal loan with a low credit score? What is the minimum credit score to get a personal loan in India?

Here is everything you need to know about the lowest credit score for personal loan in India.

Table of Contents

What is a credit score?
Importance of credit score in availing personal loan
Lowest credit score for personal loan in India
How to improve your credit score?
Summary

What is a credit score?

A credit score is a three-digit number that assesses the creditworthiness of the borrower. A credit score ranges from 300 to 900. It indicates to lenders how reliable you are in repaying your loans. Issued by RBI-authorised entities like the Credit Information Bureau (India) Ltd., your credit or CIBIL score reflects your financial reliability and plays a major role in getting approved for traditional loan applications.

You can check your credit score for free on multiple platforms. For example, on the Moneycontrol app and website you can check the credit score without any fees. You can also apply for personal loans up to Rs 15 lakhs from seven lenders. Moneycontrol offers a 100% paperless process to apply for personal loans with interest rates starting at 12% per annum.

ALSO READ: What is a good credit score? Here’s your checklist for a healthy credit score

Importance of credit score in availing personal loan

Your credit score plays an important part in deciding whether or not your personal loan application will get approved. Here is the significance of credit score:

Risk assessment for lenders: Your credit score helps lenders to assess whether you are likely to default a loan or not. A higher credit score indicates payments made on time and hence a lower risk of default. This increases your chances for personal loan approval.
Loan repayment interest: If you have a higher credit score, chances are that you will be offered loans at a lower interest rate. A lower credit score will turn this around as there is a perceived sense of higher risk for the lender.
Loan amount: A higher credit score will also enable you to get loan offers with higher amounts as lenders will trust you with their money.
Loan tenure: A good credit score can further increase your chances of being offered the highest available tenure for the loan and more flexible terms of repayment.

Lowest credit score for personal loan in India

The lowest credit score for personal loan in India varies from bank to bank. However, major lenders in India typically require a minimum or lowest credit score for personal loan at 700 or above. The ideal credit score for a personal loan should be above 750 to get better offers.

However, for some banks the lowest credit score for personal loans can be lower than 700 but the interest rates are likely to be very high. The lower your credit score is, the higher the interest rate will get. You will also not receive any benefits regarding loan tenure and loan amount.

Moneycontrol has teamed up with seven lenders to give you access to 100% digital instant loans of up to Rs 15 lakhs. You can get the loan in just three steps — enter details, complete the KYC process and set up EMI tenure. The interest rates start at as low as 12% per annum, depending on your employment status.

ALSO READ: What is the average credit score in India and how to improve your credit score

How to improve your credit score?

Make timely payments: The most effective way to improve your credit score is by paying your EMIs on time.
Limit new credit applications: If you are applying for multiple credits at a time, banks will separately perform hard enquiries about your credit score which can bring it down.
Monitor your credit score: Regularly checking your credit score is crucial for improving it. Keep an eye on it periodically, but avoid checking it too frequently, as this could negatively impact your score.
Keep credit utilisation low: Maintaining a low credit utilisation ratio can positively affect your credit score. Aim to use no more than 30% of your available credit.

To sum up, the lowest credit score for a personal loan varies from bank to bank. However, if you want the best interest rates on personal loans, it is advisable to maintain a high credit score.

Summary

Wondering if you can get a personal loan with a low credit score? Discover the minimum credit score requirements in India and learn how to improve your score for better loan offers and lower interest rates.

Disclaimer

This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.

About the Author

Fintech

Stay updated on the latest personal finance trends, with a focus on products like credit cards, credit score, personal loans, fixed deposits, and more

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