The Bulletproof Ways of Getting a Personal Loan with a Bad Credit | 2022


01 Feb 2021 | 5 min read

A bad credit score does not have to come in-between your path while you are seeking to avail a personal loan to coat an emergency or to consolidate your debts. Right!

Borrowers with low credit, which is a score lying somewhere between 300 and 550, may require to perform some additional work to be eligible for a personal loan in India. So, as our title states, these are the ways that if you follow, you may end up choosing the best personal loan in India with bad credit. Now, without hovering around, let’s get started with one of these amazing ways:

|How to Get A Personal Loan with Credit Score of 550 Or Less?

1. Neaten your credit, mitigate your debt

Prior to applying for a personal loan, get a copy of your credit report to undergo what the lenders will consider the most from it. You can find many entities online that offer a free copies of your report from all the major credit rating agencies in India.

The details on your credit report will demonstrate to you why your score is low and signify how to deal with the issues prior to a lender goes through it.

For instance, an existing debt obligation is likely a warning sign for a lender, but you’ll have a better chance of meeting if you can identify it and make the payment prior to applying for a new personal loan.

Lenders also take into account your debt-to-income ratio - the percentage of your monthly income that verges upon your debt payments. You must ensure that your DTI ratio is less than 50% in order to qualify with most of the lenders’ personal loan offers. As low your DTI ratio, as higher will be the chances of getting approval on your loan application.

If you are not in urgent need of the loan, ensure to pay off all your existing debts prior to applying for a new personal loan. This will not only mitigate your stress of debt obligations but also your DTI, your credit usage, consequently, there will be an increase in your credit score due to this.

2. Add a co-signer or collateral

Another instant solution you can adopt to get an urgent loan with bad credit in India is choosing a lender that allows you to add a co-signer. You can add your family member or your bosom friend who possesses good credit and sturdy income as it can aid you to attain approval on a new personal loan application.

You should step gently while you have availed a co-signed personal loan as the person you add as the co-applicant to your application will need to repay the loan in case you are unable to do so.

Some lenders may also offer you secured personal loans which means that you need to promise something against the loan like a vehicle, saving accounts, etc.

There are higher chances that you can avail of a secured personal loan with a low-interest rate even with bad credit, but you should keep in mind that if you default on payments, the lender is entitled to seize your collateral.

3. Establish a repayment plan

Opt for a lender that informs your loan payments to the credit rating agencies since this helps in building your credit. This signifies that the next time you borrow money or apply for a personal loan, you can attain it at a lower interest rate.

But since lenders send the information about both - timely and missed payments, your capability to make them will decide if your credit gets better or declines.

You must look upon interest rates, different fees and charges, and terms & conditions so that you can perceive precisely what your monthly outgo will be. In a nutshell, knowing that will support you in making a wise strategy to manage your repayments.

Even with a stringent repayment structure, you could land up with one or two late payments across the way. Since lenders do not send the details instantly of late payments to the credit rating agencies, you must ensure to make the payments as soon as possible to prevent the hit on your credit.

5. Contrast multiple lenders’ offers

Contrast in-between multiple offers of various lenders, consequently, you’ll end up finding the best interest rate and features in accordance with your circumstance.

Some digital lenders offer personal loans particularly for borrowers with low credit scores. Online lenders may allow you to pre-qualify with a seamless credit check, enabling you to figure out what interest rate and the loan amount you could avail without harming your credit score.

Several financial institutions need borrowers to duly apply to go through their offers which spark off a stringent check that can lead to a temporary decline in your credit score. There are numerous digital lenders that can also disburse the loan amount the same or next day, while traditional banks could take up to a week or more.

On the contrary, your community bank or credit cooperatives may possess additional willingness to consider your situations if a misconception or a years-old problem is holding your credit score down.

Digital personal loan lenders might offer competitive rates, and it might be easy to avail loans from them as you can apply at your convenience.

In a Nutshell

To sum up, since getting a personal loan with bad credit is really so tough, taking into account the above-discussed ways can help you acquire a personal loan.

You should clean up your debt obligations, apply with a co-signer, establish a repayment structure, and compare different offers of different lenders that are offering personal loans on bad credit.

In case you don’t require immediate funds, you should prioritize improving your credit score by working on the factors that are leading the decline in it.

If you are seeking instant fund assistance then you should cautiously look upon multiple offers of different lenders; you can get instant personal loans from digital lenders. Some of the leading and reliable instant loan apps in India are Afinoz, MoneyTap, EarlySalary, Credy, etc.

Afinoz allows you to compare multiple offers at one place and apply from it instantly at your ease. To apply, simply download the app from the Google Play Store and perform accordingly.

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