If you’re short on funds during festivals, weddings, or unexpected expenses, a personal loan can be a quick and convenient option. But if your credit score is 570 or below, getting approval can be tricky. Generally, any score below 650 is considered “low,” making banks and NBFCs more cautious when approving loans.
Before approving a personal loan, lenders evaluate several factors — credit score, repayment history, existing debts, missed EMIs, and overall financial stability.
A low score indicates poor repayment discipline, which increases risk for lenders. As a result, such borrowers are either offered high-interest rates, stricter terms, or in some cases, loan rejection.
Even with a low score, you can still increase your chances of approval by following these steps:
Opt for a secured loan:
Pledge assets such as property, fixed deposits, or gold as collateral. This reduces the lender’s risk and increases the likelihood of approval.
Add a co-applicant or guarantor:
Having someone with a strong credit profile on your loan application improves your credibility and boosts approval odds.
Show stable income proof:
Submit documents like salary slips, ITR, or bank statements to demonstrate your repayment capacity and financial stability.
Keep your loan amount modest and choose a shorter tenure. This gives confidence to lenders that you can repay on time. Also, clear existing debts before applying for new credit — timely EMI payments will gradually improve your credit score, helping you qualify for lower interest rates in the future.
Low-score borrowers often receive tempting offers from unregistered or illegal online lenders. Avoid them at all costs. Always borrow from RBI-registered banks or NBFCs for security and fair practices. These institutions also offer flexible repayment options if you face genuine difficulties.
Before signing, review all loan documents thoroughly — interest rates, processing fees, prepayment penalties, and hidden charges. Avoid taking multiple loans at once, as this increases your financial burden and can further harm your score.
If you’re unsure about any clause, consult your bank’s customer care or a certified financial advisor for guidance.
