Neha Agarwal wants to take a personal loan to renovate her home. But she is worried that her low credit score will lead to her personal loan application getting rejected. Is Neha right to worry about her credit score? What can she do to overcome this hurdle? 

Continue reading to understand the impact of a poor credit score on your personal loan application and smart ways to overcome it. 

What is the impact of my CIBIL™ Score on my personal loan application? 

A personal loan comes in quite handy when you require funds to meet emergency or other planned expenses. You can use a personal loan to pay for medical emergencies, fund your dream wedding, go on a holiday, purchase a flagship mobile, renovate your home or for any other reason. There are no restrictions on the end usage. 

Furthermore, since personal loans are unsecured, you don’t have to provide any collateral to get the loan. All these factors make personal loans the go-to loan product for millions of individuals. 

But the catch here is that – to get a personal loan, you need to demonstrate to the lender that you’re financially stable and are likely to repay the loan on time. How do lenders evaluate this factor? They rely on credit scores and the credit history of the applicant. 

The first factor that a lender evaluates when you apply for a personal loan is your credit score. The credit score is a numerical parameter that establishes your creditworthiness. It's based on the summary of your credit history, the debts you have taken, your repayment history and other factors. 

  • The credit score ranges from 300 to 900. The closer it is to 900, the better are your chances of personal loan approval.
  • Credit scores are provided by authorised credit ranking agencies, also known as credit bureaus. 
  • You can quickly check your credit score for free on our website. Enter your mobile number, email address and PAN number to fetch your latest credit score. 

“Most lenders require borrowers to have a credit score of 750+ to be considered for a personal loan with collateral.”

Why does a low CIBIL™ score hurt my personal loan chances? 

Lenders do not sanction loans to individuals who cannot repay them and are likely to default. Lenders want to be doubly sure that you can repay the loan. A low CIBIL™ score puts you in the high-risk category. 

Here are a few reasons why your low credit score hurts your loan application approval:

  • You have a high amount of debt
  • You have missed repayments of previous debts/credit card bills
  • You have a high credit utilisation ratio
  • You apply for credit too frequently 
  • Your credit mix is imbalanced 

Your credit score could be low because of any of these reasons. All your past credit transactions are noted in your credit history. Any of these factors could raise a red flag to prospective lenders. A poor credit score puts you in the high-risk category, causing your loan application to be rejected. Even if approved, you may have to pay high interest rates, which is not cost-effective. 

Smart Tips to Get a Personal Loan with a Low CIBIL™ Score 

Though finding the right lender is a challenge with a low credit score, you can still qualify for a personal loan by following the steps listed below:

#1: Show Proof of Stable Income 

You may have a poor credit score, but if you have a steady job with a decent income or if you have an additional source of income to your primary income, then the lender is likely to approve your loan application. 

*However, though you may qualify, the lender is likely to charge you a higher rate of interest. So, it’s highly recommended that you improve your credit score before applying for a personal loan to get the best loan deal. 

#2: Ask for a Small Loan Amount 

Most lenders are likely to reject your application outright if you apply for a high loan amount with a low credit score. This is because the lender considers you at increased risk of default, so they don’t want to risk a high amount. 

On the other hand, if the loan amount is small, the lender may be willing to grant you the loan. Also, since the loan amount is smaller, the repayment is faster, thereby lowering the chances of loan defaults. 

#3: Bring a Guarantor on Board 

If you have a low credit score, then getting a guarantor or co-applicant with good CIBIL™ scores can help you boost your chances for loan approval. This is because having a co-applicant or guarantor reduces the risk borne by the lender, so they are likely to approve the loan faster. 

#4: Scan your Credit Report for Errors 

If you’re wondering why your credit score is low, despite being cautious with all your credit transactions, then the chances are that faults or errors on your credit report may be dragging your scores down. 

Very often, the errors on your credit report are due to outdated information. You may have paid off a loan, but it may still be reported as open on your credit report. You can eliminate these errors by getting a copy of your latest credit report and scanning it for errors. If you notice any mistakes, report them to the relevant authorities and get them resolved. 

#5: Request your Lender to Reconsider if you have an NA/NH on your Credit Report 

If you’re new to credit, you are not likely to have any credit score. This is marked as NA/NH on your credit report. Alternatively, if there is an inactive period on your credit report for more than 36 months, then it’s also noted as NA/NH on your credit report. 

If this is the case, you can speak with the lender, explaining the reason for no credit history. If the lender accepts your reason, they will likely approve your loan application, albeit at a higher interest rate. 

Must Read: Personal Loans for Low CIBIL™ score

How to get a personal loan with a poor CIBIL™ score? 

Using the tips mentioned above helps you borrow money using a personal loan. You can even improve your low credit score by repaying the personal loan diligently and building a positive repayment track history. 

With that said, we highly recommend working on improving your credit score before applying for a personal loan to be eligible for the best personal loan offers. Also, choosing the right lender can make a big difference. Compare the interest rates, eligibility and minimum credit score required at different lenders to secure a personal loan that best fits you. 

Next Read: How to apply for a loan with a low CIBIL™ score? 


  1. Can I get a personal loan if my CIBIL™ score is below 600? 

Yes. It's possible, but you will have to go the extra mile to prove to the lender that you can repay the loan on time. 

  • Show proof of income and job stability 
  • File IT returns regularly 
  • Maintain a good bank balance 
  • Bring a co-applicant onboard 
  1. Can I get a personal loan without a CIBIL™ score? 

It's not possible to get a personal loan without the lender checking your credit score. However, you have other alternatives to personal loans that don’t require a credit score, including gold loans, peer-to-peer lending, using a credit card or borrowing from friends and family. 

  1. Which banks offer personal loans with a low CIBIL™ score?

Most banks do not offer personal loans to individuals with a low credit score. Your best bet for approval would be to approach an NBFC, digital lender, P2P lender or instant online loan providing fintech companies. 

  1. What is the minimum CIBIL™ score required for a personal loan? 

A score between 600 and 750 can get you a personal loan from most lenders and NBFCs. However, since the score is not considered good enough, you will likely be charged higher interest rates. You may have to provide additional documentation to prove your repayment capacity. 

  1. What is an excellent CIBIL™ score for a personal loan? 

A credit score between 750 and 900 is considered the best for personal loans. Having a score in this range speeds up the loan approval and fetches you the best interest rates.