While credit score is a 3-digit numeric expression that helps lenders assess the creditworthiness of the borrower, there are a lot of elements that come together to bring together the 3-digit number. A credit score which ranges between 300-900 is a report card of one’s financial standing, where any score above 750 is considered good, a score between 550 to 750 is average, and any score below 550 is a poor or bad credit score.

While getting personal loans with good credit score is a cakewalk, one can only get personal loans with high interest for average credit score and in some cases for poor credit score.

Ways of getting personal loans for bad credit.

  1. Prove that you can afford the EMI’s:
  2. Right after the credit score, it is income that is considered by the lender. One of the ways of getting personal loans for bad credit is by proving that you are eligible and capable of the EMI payments. If you are able to convince the lender that you have a regular and stable job, the chances for approval are higher.

  3. Apply with a co-signer or secure a guarantor:
  4. Personal loans for bad credit can also be achieved with the help of a co-signer or guarantor. Applying with the help of co-signer will make the lenders consider the co-signer’s credit score, thus improving your chances of approval. Similarly, securing a guarantor will increase the confidence of the lender that you will not default your loan payments.

  5. Pledge collateral:
  6. Another secure way of personal loans for bad credit is by pledging collateral. Collateral is just like a guarantor except it is an asset that is attached with the loan. On failure of payments, the lender has the right to sell the collateral and realise it to get back the loan amount.

  7. Ask for a lower personal loan amount:
  8. If you have a poor credit score, the chances of approval for any kind of loan is less. However, personal loans for bad credit can be possible if you ask for a lower personal loan amount. This will further reduce the risk of borrower default as the lender has to give a lesser amount.

  9. Correct the mistakes on the credit report, if any:
  10. A lot of times, errors and mistakes on the credit report can lead to a poor credit score, thus affecting credit possibilities. Check your free credit report online once a year to see if there are any errors or mistakes that you must report.
The above-mentioned measures can help in getting personal loans for bad credit. However, the best and recommended way is to improve your credit score over time and then apply for credit.

Click here to check your loan eligibility.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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