Can you get personal loan with bad credit score? Here’s what you need to know | Mint
Source: Live Mint
Getting an urgent loan in India can be very challenging, especially for people who have bad credit. Low-rated applicants with a history of previous failures like defaults or non-payment are declined by most of the lenders. Sometimes, it becomes crucial to have money today. Despite this, a poor credit score has nothing to stop one from managing the situation with detailed instructions for obtaining an urgent loan.
Personal loans
Personal loans, which are offered by banks, credit unions, and online lenders for all personal needs like consolidating debts, home improvement, medical emergency, and any other unknown expenses, are unsecured financial products available for borrowers because they do not demand collateral against which the secured loans demand.
Credit score
A person’s creditworthiness or the capability of repaying loans is reflected in a credit score. This is a three-digit figure usually found between 300 and 900. Some of the elements that factor the score include payment history, credit utilization, length of credit history, and types of credit used. The lenders will use the credit scores as the basis to know the level of risk in making credit adjustments on the limit, interest rate, and the type of loan allowed.
How to get a personal loan with a bad credit score?
There are three significant ways through which you can secure a personal loan with bad credit score, such as:
In conclusion, urgent personal loans with poor credit scores will be possible only with great difficulties in India; however, through alternative lenders, including NBFCs, internet marketplaces, or even government initiative, you are capable of drawing the emergency fund you desire. Nevertheless, ensure to completely look around, understand risks, and obtain reasonably good loan conditions.
Apart from catering to your immediate financial needs, a systematic plan for repayment will also help repair your credit score going forward. Always keep in mind that personal loans are not the best solution for all financial problems as they come with higher interest rates, and can lead you to enter into an endless debt trap.
(Note: Raising a loan comes with its own risks. So, due caution is advised)
