Every lender first considers your credit score and history before granting a loan. This is why a low credit score may not secure you a loan easily. However, personal loans can be availed with low credit scores since these are mostly unsecured and have high-interest charges.

A personal loan can be very helpful when you require funds urgently. These loans generally involve various checks performed by the lender before being granted. One of the first checks done during loan application is your credit score. So, what makes a good credit score? Will a score of 650 fetch you a loan?

Here, we will try to understand what a credit score is and how it impacts your loan eligibility before learning whether a low credit score can get you a loan easily.

What is a credit score and why is it important?

Your credit score indicates your creditworthiness. The Credit Information Bureau (India) Ltd., also known as CIBIL™ is one of the primary credit agencies that calculate this score for individuals in India. A credit score can fall in the range of 300 to 900, with 900 being the highest score and indicates the highest level of creditworthiness. The higher the credit score, the better the chances of getting a loan application approved easily.

A credit score is dependent on many factors such as repayment track record on existing debt, credit utilisation ratio, credit history, etc. Timely repayments on outstanding loans and credit cards can ensure that you have a high credit score. However, defaulting on loan repayment may result in credit score reduction. 

Additional Read: How to Choose a Personal Loan

A high credit score of 750 or above is ideal for any type of loan application. However, a credit score of 650 or less may lead to a loan application being rejected or the lender may levy a high-interest rate since such a score is considered risky.

The lender also considers your capability to repay the loan and this is determined by your credit score along with other factors like available bank balance and job security.

How to get a loan with a low credit score?

While it could be a challenge to get a loan with a low credit score, it is not impossible to get one if you take the following measures:

  1. Show income stability to ensure timely loan repayments

If you have a low credit score of 650, you can work towards and show a hike in your income or an additional income source to convince the lender about your loan repayment capability. You may also try and gather evidence about having a secure job with a regular income flow to improve the scope of getting your loan application approved. However, be prepared for paying a higher rate of interest with a low credit score.

  1. Try applying for a smaller loan amount

Banks may consider you as a high-risk applicant if you request a higher loan amount with a low credit score. Banks or lenders will assume that the probability of defaulting on the loan is higher in such cases. For lower loan amount applications, the lender may grant the loan request easily since the repayment of a lower loan amount is generally easier.

Additional Read: How to apply for a personal loan

  1. Go for a joint loan application or bring a guarantor onboard

If you currently have a low credit score of 650, try getting a co-applicant or guarantor who has a good credit rating. This can help in getting the loan faster. While applying with a co-applicant or guarantor, ensure that all the KYC formalities are completed and the necessary signatures have been provided on the relevant loan documents. With a co-applicant or guarantor who has a good credit score, your loan application has higher chances of getting approved and you can get a better loan deal.

  1. Check for errors in the credit report

You may be finding it difficult to get a loan with a low credit score of 650, however, there may be some errors on your credit report. This usually happens in case your credit record hasn’t been updated as per the latest available information. Such mistakes may cause unwanted issues in your credit report. To resolve such issues, make sure to regularly check your credit score. If you come across any errors, make sure to report them to the credit agency and request a quick resolution. This can help in raising your credit score faster and improve your chances of securing a loan.

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  1. Request your lender for an exception in case of an inactive credit period

In case you have an inactive credit period for the past 36 months or no credit activity during the same period, the same will be marked as NA or NH on your credit report. This means you may not have a credit score on your credit report.

For such cases, you may reach out to the bank or lender and provide an appropriate reason for credit inactivity. There could be chances that the bank provides a loan with certain caveats in such cases.


It is important to constantly work towards improving your credit score from 650. This will help you to secure loans easily and on better terms. A higher credit score can also allow you to apply for credit cards and avail of other credit facilities easily in the future.


  1. Is it better to have a high or low credit score?

It is always sensible to have a high credit score since it indicates higher creditworthiness and makes it easier to get loans or credit facilities at reasonable terms.

  1. What are the benefits of credit scores?

A credit score helps lenders gauge the creditworthiness of borrowers before granting a loan or credit facility. For borrowers, a high credit score is important in getting loans at low-interest rates and flexibility of other loan terms.

  1. Is a 715 credit score good?

A credit score of 700-750 is considered good by most banks and lenders. It indicates that you have been repaying your loans and debt on time and maintaining a low credit utilization ratio. However, for the best loan interest rates, you need to work on bringing your credit score to 750+. 

  1. What is the minimum credit score for a loan?

A minimum credit score of 700 is considered ideal for getting a loan at low-interest rates and flexibility of other terms. 

  1. How much loan can I get with a 750 credit score?

A 750 credit score can get you the desired loan amount depending on the category of loan and the purpose of the loan application. 750 is considered an excellent credit score and reflects good credit behaviour on your part including a low credit utilisation ratio.