How to Get a Personal Loan with Low Credit Score?

Personal Loan with Low Credit Score

If you see a product online with low rating and poor reviews, you wouldn’t feel like buying it, right? Similarly, a lender would be reluctant to give you a loan if you have a low credit score. 

Your credit score reflects how trustworthy you are as a borrower. It usually ranges from 300-900. Credit score above 750 is considered a good credit score. If your credit score is low, loan companies would be reluctant to lend you money and even if they decide to lend you money, they will charge you a higher interest rate as you would be considered a risky borrower. 

Your Credit Score Could be Low Due to the Following Reasons – 

1. You applied for a credit card or personal loan with multiple lenders at the same time. 

2. You maxed out your credit card or utilized a large portion of your available limit. 

3. There was an error from the credit bureau’s end or your credit information was incorrectly reported.

4. You defaulted on a loan or credit card payment or paid after the due date. 

5. You are new to credit and don’t have a credit history. 

6. You applied for a credit card or a loan and got rejected. 

Factors that Affect Your CIBIL Score

The 3-digit CIBIL score is not just about your payment history. It also depends on the other factors below.



Repayment History


Credit Utilization


Types of credit & duration


Other Factors


The other factors that can impact your CIBIL score are the number of credit enquiries you make, credit utilization, credit mix, etc.

5 Ways to Get a Personal Loan with Low Credit Score

1. Apply for a Loan with a Co-Applicant 

When you apply for a personal loan with a co-applicant, both of your credit history would be taken into account while considering the loan approval and both of you would be responsible for repaying the personal loan. 

So, if your co-applicant has a steady source of income and a good credit score, your probability for loan approval will increase. 

2. Add a Guarantor to Your Loan 

Adding a guarantor increases the chances of getting a personal loan with low credit score as the guarantor provides an additional layer of security to the loan company. 

Unlike applying with a co-applicant, here the borrower would be responsible to repay the loan. The guarantor would be legally obligated to pay only if the borrower fails to pay the EMIs.   

3. Pledge Collateral Against Your Loan 

Usually, personal loans are unsecured loans which means that you can take them without submitting any asset as security.  

However, if you have a low credit score and are unable to get a personal loan, you can give some form of security to the loan company which can significantly increase your chances of loan approval. 

One of the most common types of secured personal loan is loan against property.

Here, you can get a loan of higher amount by submitting documents of your property as a collateral. The loan company will keep the documents with themselves until you pay off the loan. In case you fail to repay your loan, the lender will have the right to auction off your property to recover the loan amount. 

4. Peer-to-Peer Lending 

Also popularly known as P2P lending, here you can borrow money through online services that work as an intermediary between lenders and borrowers.  

P2P portals are majorly used by people with low income or poor credit score. Here, the borrower and the lender have the convenience of directly negotiating with each other. This method requires minimal documentation and the loans are unsecured in nature. 

5. Check Your Credit Report for Errors 

There are many instances when loan companies make an error when reporting your credit details to the bureau. There could also be an error on the bureau’s end. Therefore, it is necessary to regularly check your credit report, especially if you have a low credit score. 

If you identify any error, like incorrect personal information, error in payment status, outdated information, etc, you should file a dispute online on the bureau’s website and get the error rectified.  

5 Tips to Increase Your Credit Score 

The moment you get to know that you have a low credit score, start with these steps –  

1. Pay your EMI and credit card bills on time. 

2. Don’t take too much debt at the same time. 

3. Review your credit reports regularly. 

4. Never apply for multiple loans and credit cards at the same time. 

5. Keep your credit card utilization below 30% of your available credit limit.  

Also Read: How to Improve Cibil Score?

In Conclusion 

It is difficult to get a personal loan with low credit score but as we saw in this blog, there are ways to navigate this problem. However, it is extremely important to have a healthy credit score and you should actively work towards achieving the same.

Frequently Asked Question

Can I Get A Personal Loan If My Cibil Score Is Low?

While you might find lenders willing to offer you a personal loan with a low CIBIL score, the interest rate charged on them will be higher.

Having a high CIBIL score means you can borrow a high loan amount at a lower interest rate. And you also get quicker loan approvals and disbursals.

Is 550 A Good Cibil Score?

No, 550 is not considered a good CIBIL score among most lenders. Anything above 750 is considered a good CIBIL score.
Refer to this table below to know whether your CIBIL score is good or bad:


CIBIL Score Range










Can I Get A Loan With A 520 Credit Score?

You may find it difficult to get a personal loan with a 520 credit score. But even if you find a lender willing to give you a loan at this score, you may have to pay a high interest on the same.