While good credit score can make you eligible for multiple loan and credit card offers, bad credit can have a negative impact which may prevent you from getting all these credits. However, getting a loan with bad credit is possible if you know where you look for it.

There are two types of loans namely secured and unsecured loans. You need to pledge your collateral to obtain a secured loan and on the other hand, no security is required to get an unsecured loan. 

What is bad credit?

Before getting to know what loans are available for bad credit, it is important you get an idea about what bad credit is. Your credit is in bad shape if you have defaulted on your past loans, have settled or written off accounts, foreclosure by banks, consistent late payments, etc.

Any credit score of 650 and below are considered a bad score. Improving your credit health is essential to become creditworthy. The credit score ranges between 300 to 900. Following table explains the credit score range and their meaning.

 Credit Score Range   Meaning
 750 and above  Excellent
 700 to 749  Good
 650 to 699  Fair
 600 to 649  Poor
 Below 600  Very Poor 

Check your credit score before applying for a loan in order to ensure your creditworthiness. It will also help you find the right lender who would offer you the best loan based on your credit health. Following are some of the loan options available for people with bad credit.

Loan Against Property

The lenders usually expect a good repayment capacity from the borrower or some form of security to recover the loan amount. Loan against property is one of the viable options that can be exploited by the individuals with very bad credit to get funding for their immediate needs. These loans can be obtained from banks and NBFCs. The interest rates on loan against property for bad credit is slightly higher due to your poor credit health.

You can make use of this loan for various purposes such to pay off existing debts, medical emergencies, education, etc. Loan process will be quicker if you have all the documents ready with you.

Gold Loans

Gold loan is one of the best secured loan options for bad credit individuals. If you want instant funds with bad credit score, gold loan can help you get it. You just approach any bank, NBFC or any other private lenders with gold ornaments, coins or bars, you can walk out with cash in an hour.  Most lenders do not do a credit check for gold loans. The gold is evaluated by an appraiser, and the interest rate is determined instantly.

Gold loans are easier to get as the lender has the advantage of your collateral. The lender will auction your jewels to recover the loan amount when you are unable to make repayments consistently. Gold loans are the best if your need quick funds for a short-term financial need.

Peer to Peer Lenders

When banks and NBFCs fail you while trying to secure a loan with bad credit health, you can turn to peer to peer lenders where you may have higher chances of approval. You can check online for peer to peer lenders who provide exclusive bad credit loans. The interest rates tend to be higher as you have bad credit history. However, the rejection rates are lower with peer to peer lending platforms.

The loan amount may start from Rs. 50,000 and it can go up to Rs. 10 Lakhs depending on your credit need. Most of the lenders do not ask for collateral, however, if the loan amount is higher, a certain form of security is required to get the loan.

Loan Against Fixed Deposit

Loan against Fixed Deposit is one of the secured loan options that can get you immediate funds. You can avail a secured loan against your fixed deposit at better rate of interest even with bad credit score. The maximum loan amount could be up to 80% to 85% of the fixed deposit amount. The interest rates on loan against fixed deposit tends to be moderate as the banks have the advantage of your collateral.

Debt Consolidation Loan

Debt consolidation loans help you pay off the multiple existing loans and improve your credit score. The main objective of the loan is to improve your credit health, and it cannot be used for personal emergencies or any other purposes. After taking out this loan, you will have a fresh repayment period with new terms on the loan.

Debt consolidation loans help improve your credit health considerably if you are consistent with the repayment. It is the best option to go for if you want to get out of debt sooner and convert your bad credit to good credit.

You can check out for lenders who offer these loans exclusively for people with bad credit score. Though a debt consolidation loan is generally an unsecured loan, certain lenders may demand a collateral if the loan amount is higher. Moreover, some lenders provide only up to a certain percentage of the overall amount required for closure of all loans. The rest of the amount has to be arranged by you. The loan amount can be up to 85% of overall debt.

Secured Credit Cards

If you need immediate funds and are unable to get a loan, you can opt for a secured credit card. However, to get this card, you need to have a fixed deposit. You can avail credit limit for up to 85% of the fixed deposit. These types of cards come with an interest free period of up to 50 days.

Insta Credit Card Loans

If you are using a credit card and regular with the repayment, you may be eligible for an instant loan against your credit card limit. You can check with your credit card company for such loans. The approval is purely based on your past repayment activities.


Bad credit is not permanent and it’s not something that can’t be changed. After finding out you have a bad credit, analyse the reasons for poor credit and take necessary actions to improve immediately. Though you may be able to get a bad credit loan, it could become burdensome for your finance as the interest rates are higher.