How to Get a Loan with a Low Credit Score [2025 Guide]

• Introduction: Is a Low Credit Score a Death Sentence for Loans?

Let’s be real — a low credit score can feel like carrying a financial scarlet letter. Whether it’s because of missed EMIs, high credit utilization, or just plain bad luck, lenders tend to slam the brakes the moment they see that dreaded 500-something score.

But here’s the twist: you can still get a loan even with a low credit score — if you know how to navigate the system smartly. From secured loans to co-signers, NBFCs to peer-to-peer lending, there are real options out there that don’t involve desperate measures or untrustworthy sources.

In this blog, we’ll walk you through how to get a loan with a low credit score in India in 2025, what to avoid, how to strengthen your profile, and how to improve your odds without getting trapped in shady deals. With the right approach, you can still gain access to credit, rebuild your financial health, and work toward a better future.

• What is Considered a Low Credit Score in 2025?

A credit score (CIBIL/Experian/Equifax/CRIF) is a 3-digit number between 300 and 900. It acts as a summary of your creditworthiness, reflecting how likely you are to repay loans and credit on time.

In 2025, the following scale is typically used by Indian lenders:

Credit Score Range	Rating	Loan Eligibility
750 – 900	Excellent	Very high approval chances
700 – 749	Good	High approval chances
650 – 699	Fair	Moderate eligibility
600 – 649	Poor	Difficult, needs support
Below 600	Very Poor	Very difficult or denied

If your score is below 650, you’re in the risk zone for most traditional banks. However, several non-conventional paths and new-age lending models have evolved to accommodate individuals with poor credit scores.

• Loan Options Available Even with a Low Credit Score

Here are several loan types and methods that may still work despite a low score:

👉 1. Secured Loans (Collateral-Backed)

Offering collateral can significantly reduce lender risk and increase your chances of approval.

✔️ Gold Loan: Among the easiest options. Your gold is the security, so lenders don’t rely heavily on credit scores. Minimal paperwork, quick disbursal.

✔️ Loan Against Property (LAP): Your house, flat, or land can be mortgaged to get a substantial loan amount. Useful for consolidating debts or funding a business.

✔️ FD-backed Loan: If you have a fixed deposit, most banks allow you to borrow against it. Interest is charged slightly above FD rates, making it a cost-effective option.

✔️ Vehicle Loan: Some lenders offer car loans even with low CIBIL, especially for used vehicles with 50–75% LTV (Loan-to-Value ratio).

👉 2. NBFCs (Non-Banking Financial Companies)

NBFCs offer more leniency and flexibility in comparison to traditional banks. These financial institutions have grown in popularity, especially for customers with suboptimal credit.

✔️ Key Players: Bajaj Finserv, Tata Capital, MoneyTap, CASHe
✔️ Flexible Terms: Some NBFCs provide tailored repayment plans and consider income and employment more than just the credit score.
✔️ Digital KYC: Easier online processing, minimal paperwork
✔️ Drawback: Interest rates may be slightly higher (13–25%) than banks

👉 3. Peer-to-Peer (P2P) Lending Platforms

This model connects borrowers directly with individual lenders, bypassing banks. Your credit score is just one aspect; income, purpose of loan, and repayment plan matter too.

✔️ Leading Platforms: Faircent, LendenClub, RupeeCircle
✔️ Loan Size: Ideal for amounts between ₹50,000 to ₹5 lakhs
✔️ Processing Time: Fast, mostly digital
✔️ Interest Rate: Between 12–30%, depending on borrower risk profile
✔️ Transparency: Lenders see your profile and choose to fund you directly

👉 4. Co-signed or Joint Loans

Bringing in a co-applicant with a good credit score can drastically boost your approval chances.

✔️ Good for: Home loans, personal loans, education loans
✔️ Why it Works: Lender looks at the combined creditworthiness
✔️ Trust Factor: Both parties are legally responsible for repayment

It’s important to ensure mutual agreement and transparency before opting for this route.

👉 5. Salary-Based or Employer-Partnered Loans

Many fintechs and digital lenders now offer salary-based loans that use your income proof as the main eligibility factor.

✔️ Fintechs to Check: KreditBee, EarlySalary, NIRA, PaySense
✔️ Loan Disbursal: Often within 24–48 hours
✔️ Interest: Depends on salary and repayment term; lower for government or stable jobs
✔️ Credit Score Impact: Secondary consideration

• Common Mistakes to Avoid When Seeking a Loan with Low Credit

When you’re in a credit crunch, desperation can lead to poor decisions. Avoid these common blunders:

1. Falling for Loan Sharks or Unlicensed Apps

Unregistered lenders often use aggressive recovery tactics and charge unethical interest rates.

🔹Red Flags: No physical address, no RBI license, shady app permissions
🔹Risk: Mental harassment, legal trouble, data theft

Always verify the NBFC/lender on the RBI website and check user reviews.

2. Applying to Too Many Lenders at Once

Each loan application creates a “hard inquiry” on your credit report. Too many inquiries within a short span lower your credit score further.

🔹Tip: Use pre-approved or soft inquiry platforms first
🔹Strategy: Target 1–2 lenders who actually deal with low-credit clients

 3. Ignoring Debt-to-Income Ratio (DTI)

Lenders assess your ability to repay based on your existing income vs liabilities.

🔹Ideal DTI Ratio: Below 40%
🔹Calculate: Total monthly debt payments divided by gross monthly income

If your DTI is too high, you may be rejected even if your credit score isn’t terrible.

•  Pro Tips to Improve Approval Odds

These tips can drastically improve your chances of loan approval, even with poor credit:

1. Apply for a Small Loan First

Micro-loans or small personal loans can build trust if repaid on time.

🔸Examples: Short-term ₹10,000–₹50,000 personal loans
🔸Impact: Boosts credit history and demonstrates repayment ability

2. Maintain a Stable Job and Salary Trail

Employment history plays a major role when your score is low.

🔸Long Tenure: 2+ years in the same company looks solid
🔸Government Jobs: Often considered safer for lenders

3. Submit All Possible Proofs

Apart from salary slips, include:

🔸 Form 16
🔸 IT returns of last 2 years
🔸 Rental income proof
🔸 Business income details
🔸 Utility bills and lease agreements (for address proof)

4. Offer Collateral or a Guarantor Voluntarily

Doing this proactively shows financial discipline and readiness to repay.

🔸Even Small Collateral: A gold chain or a fixed deposit can make a difference
🔸Guarantor: Must be creditworthy and have stable income

• Long-Term Fix: How to Rebuild Your Credit Score

Even if you get a loan now, it’s critical to work on improving your score over the next 6–12 months:

✨ Never Miss EMIs: Even a one-day delay impacts your credit report
✨ Credit Utilization: Keep your credit card usage under 30%
✨ Credit Mix: Maintain a healthy mix of secured and unsecured loans
✨ Avoid Closing Old Cards: They help with credit history length
✨ Check for Errors: Dispute wrong entries in your credit report
✨ Space Out Applications: Avoid applying for new credit frequently

Use tools like OneScore or CRED to track your progress month over month.

• Bonus: List of Top NBFCs and Fintech Lenders for Low Credit Profiles (2025)

Lender Name	Loan Type	Specialty	Disbursal Time
KreditBee	Personal Loan	Young salaried professionals, app-based	Within 24 hours
CASHe	Salary Advance	Based on monthly income, no guarantor needed	Instant
RupeeCircle	P2P Loan	Alternate credit scoring model	48-72 hours
LendenClub	Personal Loan	Individual lenders; low credit okay	3-4 working days
Bajaj Finserv	Consumer Durable	Flexible EMI, high approval rate	2-3 days
EarlySalary	Instant Loan	Short-term salaried loans with low docs	Same day

• Final Verdict: Yes, You Can Get a Loan with a Low Credit Score in 2025

A low score isn’t the end of your credit story. It just means you need to take a smarter route — one that includes secured loans, alternative lenders, and supportive documents.

With growing fintech innovation in India, 2025 is actually the best time to secure loans through legit, alternative means even with a subpar score. Stay informed, avoid predatory lenders, and use the loan responsibly to rebuild your financial credibility.

Remember: Getting approved is just step one — repaying responsibly is what builds a better future.