Get a personal loan despite low CREDIT SCORE; check these five tricks

Non-banking financial companies often approve personal loans to people with low credit scores but it comes with a rider.

There are many people whose loan applications get rejected by lenders due to low credit scores or CIBIL scores. A loan rejection may break many dreams. People with low credit scores also want to improve their lifestyle but since their creditworthiness or borrowing power is less, they often feel dejected. A credit score below 624 is considered a bad credit score while those above 700 come under good and those above 750 are considered excellent.

Now, you may be surprised that while a bank may have rejected your loan application owing to a low credit score, there are many ways by which you can avail of a personal loan. Some of them are listed here:

Apply with NBFCs: Non-banking financial companies often approve personal loans to people with low credit scores but it comes with a rider. They offer it at a higher interest rate compared to the nationalised banks. Since NBFCs have higher flexibility when it comes to credit scores, they are willing to take a risk and offer loans to needy people.

Peer-to-Peer Websites: These are lending websites often known as P2P websites. These offer a loan up to Rs 5 lakh for a period between one year to five years. These websites connect borrowers and lenders to facilitate loan approvals.

Get a co-applicant: If your earning or credit score doesn't qualify for a loan, then adding an earning family member as a co-applicant can prove to be helpful. Since it will reduce the lender's credit risk, you may stand a higher chance of getting the loan.

Smaller Amount: Lenders often hesitate to grant a high-value personal loan to people with low credit scores. So, if you will opt for a smaller amount, it may get approved with minor checks. Suppose if you borrow a loan of one lakhs and repay it timely, it will also improve your credit score and thus allow you to get a bigger loan.

Secured loan: Secured loans are the loans granted based on collateral. It means that you will have to mortgage something valuable in return for the loan amount. You may mortgage gold, property, financial securities, etc. You may also go for a gold loan that comes with a lower rate of interest.

However, be mindful that loan borrowing capacity is also affected by your repayment history. It would be difficult for you to get a loan if you defaulted on EMIs/repayments more often.