If you have a financial emergency on your hands, whether it be medical bills, wedding costs or home repairs, you may be thinking about personal loans that can be accessed quickly. When you consider your financing options, you can see personal loans are available and desired for their flexibility, even in instances of poor credit. That said, you might think getting approved will be difficult if you have a low credit score. Don’t fret, there’s more you can do.
This guide will show you how to get a personal loan online even if your credit score is not ideal. We will also share some smart tips as well as mistakes you want to avoid.
What Is a Personal Loan?
A personal loan is defined as an unsecured type of financing, which has been lent from a bank, NBFC (non-banking financial company), or digital lender for pretty much any purpose (i.e. travel, education, debt consolidation, emergency, etc.). Because it is unsecured, lenders primarily care about your ability to repay the loan (or mostly your credit score) to approve your loan.
What Is Considered a Low Credit Score?
In India, credit scores typically range from 300 to 900. A score:
- Above 750 is considered excellent
- 650–749 is average to good
- 600–649 is fair
- Below 600 is considered poor or low
Obtaining a personal loan with low credit score (say, below 650) may seem challenging, but a number of lenders now provide customized options for applicants with poor credit histories.
Can You Get a Personal Loan with a Low Credit Score?
That’s right, you can. Nowadays, several digital lenders and NBFCs in India are offering personal loans even to customers with low credit scores, instead of focusing on credit score, they are focusing on other parameters like your income, job stability, and repayment capacity.
Here’s how you can get personal loan online despite a poor credit score:
- Choose Lenders That Offer Loans for Low Credit Scores
Begin by looking for financial institutions or fintech lenders that provide personal loans for individuals with bad credit; for example, Aeon Credit provides hassle free personal loans online with few documents, so is more likely to accommodate your less-than-perfect credit profile.
- Show Proof of Income and Job Stability
Demonstrating a consistent source of income, even with a bad credit history, can increase your odds. The lenders want to be assured that you’ll pay the loan back. Many salaried employees have consistent employment, and many self-employed professionals have consistent cash flow that helps them make a case.
- Apply for a Lower Loan Amount
When you are looking to apply for a personal loan with low credit score, it may be beneficial to only ask for a small amount of money. Asking for a smaller amount lowers the risk for the bank, and will result in you being more likely to get the funds you need. After successfully paying it back, your credit score will improve, and you will be eligible for larger amounts.
- Get a Co-applicant or Guarantor
If you can, submit your application with someone who has strong credit or financial history. Having one or more co-applicants or a guarantor can greatly improve your eligibility for a loan. Sometimes loan products will even offer a better interest rate, and you will have a better chance of being approved if you submit with someone else.
- Offer Collateral (If Applicable)
Personal loans, in the general case, are unsecured loans, but some lenders may offer secured personal loan variations for example, with a fixed deposit (FD), gold, or life insurance policy as collateral. This security reduces the lender’s risk, allows the borrower to qualify, and improves the likelihood of approval even if you have a bad credit score.
Benefits of Getting a Personal Loan Online
Through digitized innovation, you don’t need to physically go through a branch or stand (potentially) long lines just to see if you are qualified for a personal loan. Here are some great reasons why you should you obtain a personal loan online:
- Rapid Turn-Arounds: Online personal loans can be approved in minutes, and/or even hours.
- Low-to-Minus Documentation: You can upload documentation like a PAN number, Aadhaar number, and salary slips.
- Instant Disbursement: You will receive the loan in as little as 24, confidently 48 hours.
- Flexible Time-Course: You can structure your repayment term the way you want, which could be anywhere from 12 months to 60 months.
- Transparency: The digital platform is simply transparent. With instant access to the loan terms, like the date, EMI calculator and repayment schedules, you will receive your time-course commitments in writing.
Documents Required to Apply Online
While the exact documents may vary by lender, here’s a general list:
- PAN Card
- Aadhaar Card
- Income proof (salary slips or ITR)
- Bank statements (last 3–6 months)
- Employment proof
For quick and simple access, platforms like Aeon Credit provide a seamless online process that requires minimal paperwork and offers customer-friendly terms.
Common Mistakes to Avoid
When applying for a personal loan with a poor credit score, additional precautions must be taken. Common things to avoid are:
- Applying to multiple lenders at once: This can lower your score further due to multiple hard credit inquiries.
- Hiding financial details: Always be transparent. Hiding existing loans or EMIs can hurt your chances.
- Disregarding terms and conditions: Always read the fine print to avoid unwanted or unexpected fees, high prepayment penalties, or terms you don’t want or didn’t expect.
- Relying on high-interest loans and not fully understanding the process: Lenders can prey on borrowers and they are banking on the borrower’s sense of urgency or need to secure the loan. Always assess your options and compare before you sign the agreement.
How to Improve Your Credit Score Post Loan
Once you manage to get a personal loan, the journey doesn’t end there. Use this opportunity to rebuild your credit score:
- Pay EMIs on time – Even one missed payment can hurt your score.
- Keep credit utilization low – Don’t max out your credit cards.
- Avoid taking multiple loans at once – This indicates financial stress.
- Consistently monitor your credit report – Discover and fix any inaccuracies or obsolete information.
With time, this persistent strategy could push your score into the 700s, enabling you to receive more appealing and favourable interest rates and loan offers.
Conclusion
A low credit score should not be considered a stopping point, especially in the current digital age. Whether you are needing a loan for medical purposes or to allow yourself some financial breathing space, there are lots of alternatives to get a personal loan online. By being mindful of the planning and responsible repayment, you can access a loan and begin to recover your credit profile.
Conduct some research on the lenders before applying and there are many reliable lenders including Aeon Credit India who has solutions for borrowers with poor credit scores. Ultimately it is making informed decisions, using the loan responsibly financially, and growing the loan into a better overall credit picture.