Everyone goes through tough situations at some point in life. Having a bad credit score is one such situation that might make it difficult for you to get a credit through formal lending institutions. The lenders take a deep look at your credit history and take a decision whether to lend to you or not. Considering the risk involved in lending, your credit profile may not qualify for an unsecured loan. However, the chances are not completely ruled out. You can consider going for a secured form of credit, wherein the approval rates are better as the creditors have the advantage of the collateral which can be used to cover the losses in case the loan is not repaid. Following are some of the secured loan options that are ideal for individuals with bad credit.

Loan Against Property

Loan against property is a secured loan that can be availed by pledging your collateral. This is a big-ticket loan that can be used for multiple purposes. You can even use the loan amount to pay off the outstanding dues on other loans or credit card bills to rebuild your credit score positively.

The maximum tenure on a loan against property is up to 20 years. You can choose a repayment period that is comfortable for you and rebuild your credit score through regular repayment. As you have bad credit score, the interest rates may be slightly higher than the normal rates. It might take up to 10 to 20 days for the approval and disbursal of loan against property which is higher than other form of loans. The lender usually sanctions up to 75% value of the property as the maximum loan amount.

You may approach a housing finance company, private lender or a peer lending platform who are willing to lend to individuals with bad credit score. Some of the lenders do not do a credit score check for such loans which can be an advantage for you to get a better rate of interest.

Gold Loans

Since the gold acts as the collateral, a gold loan can be easily availed by people with bad credit score. If you need immediate cash for a short-term financial emergency, gold loans can be the best way as the loan amount is disbursed within a day. The interest rate on this loan can range between 9.25% to 17%. With a bad credit, the interest rate could be higher for you as the lender might consider you a risky borrower.

As it’s a secured loan, you should be careful about the repayment. If you default continuously on the loan, the lender may auction the gold articles you have pledged to retrieve the loan amount.

Additional Reading: Beginners Guide to Gold Loans

Secured Credit Cards

Credit cards come loaded with a pre-approved amount up to which the card holder can use to make all type of transactions and pay for them later. It’s not so easy for people with bad credit score to get a credit card. However, a secured credit card can be availed against your fixed deposit account. The credit card company provides up to a certain percentage of the fixed deposit as the credit limit on the card. When the user defaults on the bill payment, the credit card issuer will retrieve the amount from your fixed deposit. It’s a lucrative option if you have a fixed deposit as it provides an easy was to access credit.

 Score Range

 Score Type

 Credit Card Approval Chances

 300 - 500


 May Need a Secured Credit Card

 500 - 650


 Higher chance of denial

 650 - 750


 Approved for most cards

 750 - 850


 You have your pick of cards

Additional Reading: Bad Credit Score? Consider a Secured Credit Card

Loan Against Securities

Securities and investments such as shares, mutual funds, insurance policies, fixed maturity plans, saving bonds, exchange traded funds, etc., can be pledged to obtain loans for immediate financial emergencies. These are secured loans, and the lender has the advantage of the securities when the loan is not repaid properly.

Before applying for the loan, you will need to check your eligibility criteria. Once you are eligible, your documents will be processed for approval. The loan amount will be determined based on the amount being invested in the above-mentioned securities. Some lenders provide loan amount as high as Rs. 10 Crores against insurance policies and bonds.

Certain lenders also provide overdraft facility against the securities wherein you can withdraw up to a certain amount. The interest is only charged for the amount borrowed and the rates depend on the nature of the collateral.  

Tips For Getting Approval On Secured Loans With Bad Credit Score

If you find it difficult to get approval on various loans with bad credit score, you can do the following things to increase the chances of approval.

#1: Get A Co-signer/ Co-applicant/ Guarantor On Board

When you are unable to establish your eligibility criteria, you can get a co-applicant on board who has a better eligibility. The lenders will be comfortable to lend to you when there is a guarantor to vouch for the repayment. In case your spouse or parents have good credit score, you can make them a co-applicant to get guaranteed approval on all secured loans.

#2: Improve Your Credit Score

Establishing a positive payment history is vital in getting for all the loans. If you need loans of higher amount, try to clear the negative issues by repaying the debts. Once you have rebuilt your credit score, you can start applying for bigger loans so that the approval chances are higher.

Errors on your credit report also can be a hindrance to getting approved for loans. By checking your credit report, you can identify the errors and take steps to clear them.

#3: No Credit Check Loans

There are certain lenders such as private creditors, peer to peer lending platforms, etc. do not check your credit score for loan approval. You can look for such lenders and apply for loan with them. However, there may other eligibility criteria that need to be fulfilled.


You can either do a proper research and explore options that can fetch you a secured loan even when you have bad credit score or wait till you improve your credit score and become eligible for better credit options that will get you guaranteed approval.