What is considered a bad credit? Who will have bad credit? Will I get approved for a loan if I have bad credit? These are the questions people generally ask when they find their credit score has dipped. If your repayments go for a toss, you might find a reduction in your score.

You borrow from banks; they expect you to repay the credit in full at an agreed interest rate. Failure to repay the loan or credit card bill can hamper your credit score. Once the score has reduced, it is a herculean task to convince the lender for any loan or credit card approval in the future. However, to give another chance to get back on track, there are few lenders who consider providing credit to bad credit individuals. If you find yourself with bad credit and look out for a loan, the following information will help zero in on the right lender.

How To Get A Loan With Bad Credit

While it is hard to get approved for a loan with bad credit rating, here are the measures, implementing which, you can get a loan successfully.

  1. Proof of Income to Support EMI: If you have a sudden rise in your monthly salary, you may use it to convince the lender about your repaying ability. A steady job and higher income are good factors to get approved for a loan despite poor credit score. However, the interest rate on the loan will certainly be higher.
  2. Onboard A Co-Applicant/Guarantor: When you are unable to become eligible for a loan, you can use the better eligibility of another person. You can get the help of a guarantor who can vouch for you to get a loan. Getting a co-applicant for a home loan will get you better approval chances and higher loan amount.
  3. Secured Loans: As you are considered a risky borrower, there is a fighting chance to get approved for an unsecured loan. Hence you can try getting a secured loan wherein the lender has the advantage of the collateral. You might easily get approved for a secured loan such as gold loan, home loan, loan against property, plot loan, etc.
  4. Correct Mistakes on Your Credit Report: Mistakes on your credit report may hinder your chances of getting approved for a loan. You can get your credit report from the bureaus and look for errors. If you find any, you can get it corrected by raising a dispute resolution. Once the errors are cleared, you can get approval for any loan or credit card.

Best Loan Options for Bad Credit in India

Debt Consolidation Loan: Getting constant reminders and calls about loan repayment or credit card bill payment can be annoying especially when you do not have funds or lost your job recently. Debt consolidation is one of the best options wherein you can secure a loan to get out of bad credit situation. On regular repayment, your credit score will gradually increase ang get you back on good credit health.

Debt consolidation loan is nothing but taking one loan to pay off all the other loans. This option is best suitable only if your purpose is to improve your credit. There are peer to peer lenders who provide debt consolidation loans to individuals with poor credit score.

Additional Reading: Debt Consolidation Loans - How Can They Be Useful To You?

Following are the features of debt consolidation loan available through peer to peer lenders.

  • Maximum loan amount – Rs. 10 Lakhs

  • Interest rate – 15% to 36%

  • Tenure – up to 3 years


  • You should have a valid Indian bank account.

  • You should be 18 years old and above.

  • You should be an Indian resident.

  • You should either be a salaried or self-employed individual.

  • You should have valid ID proof.

Secured Credit Cards

You have a bad credit; most of your income goes toward repayment of past dues, you need additional funds to manage your monthly expenses. In such instances, you can use your saving option such as Fixed Deposit (if you have any) to avail a credit card that can help manage your additional expenses. This comes with the interest free period of up to 50 days which gives you a space to arrange money for repayment.

Additional Reading: What is a secured credit card?

Salary Overdraft

When getting loan becomes impossible, you can opt for a salary overdraft. But this works for you only if you are a salaried employee. This is offered to individuals who draw their salary through a particular bank. Check if your bank offers this facility and apply for credit facility. You will mostly get up to 2 times of the monthly salary as overdraft. In most cases, no credit checks are made as the eligibility is established based on amount gets credited to your bank account.

No Credit Check Loans

There are few lenders who provide loans at higher interest rate without any credit checks. Individuals with bad credit can avail this option for sudden financial emergencies. Though no credit checks are made, the lender may look for eligibility criteria such as income and employment.

Additional Reading: No Credit Check Loans in India

End Note

Though there are multiple options to get a loan despite your bad credit, being credit healthy is vital to enjoy a better financial future. The terms on the bad credit loans are quite unattractive that may even become more burdensome to your finance. Take actions to improve your credit health and start applying for any kind of loans to enjoy better rates and repayment.