Having bad credit to your name, which is typically depicted as a score on your CIBIL report is not the end of the road for a personal loan seeker. Yes, it is true that every applicant needs to have the required CIBIL score for a personal loan. But there are exceptions to every rule and there are ways to secure a personal loan in spite of bad credit.

The very phrase ‘personal loan’ implies that you are looking for an unsecured loan without providing collateral. Availing a personal loan with bad credit may seem daunting but it is easier to get approved than you may imagine.

First, it is prudent to generate your credit report and check your credit score. It is not uncommon for the credit report to show previously repaid loan as pending or overdue. Take note of these anomalies and get them addressed immediately.

To address incorrect information in the credit report you will need to contact the bank, lender or credit card company that extended the loan to you, and ask for your details to be updated and depict the current picture. Correcting your credit report is important as this will help to increase your CIBIL Score.

A credit report score ranges from 300 to 900, with 300 being not credit worthy. Typically, a score above 700 is considered a good score and is one at which any lender will welcome you for a personal loan. When the credit score drops below 550, it may be considered a bad credit score, however, every lender has its own cut off. Finding out the cut-off score with various lenders is your first step. The second step would be to try and increase your credit score by paying off any pending loans and paying your credit card bills on time.

Also Read : How Your Credit Score Works

Availing a personal loan with bad credit can be more cumbersome, but there are ways around this. Here is what you need to do:

  1. Apply online
    Commercial banks may frown at those with bad credit when considering extending a personal loan. In fact, in case a bank declines your loan application the same will show in your credit report, which is not good. The best place to get a personal loan when you have bad credit is to knock on the doors of financial institutions that will overlook your bad credit and look at your loan repayment history and your ability to repay the loan with your current earnings.
  2. Check your eligibility for an online personal loan
    Check the personal loan eligibility online, which will typically include a minimum salary based on where you reside and other information such as current loans being serviced.
  3. Diligently submit the documents required for personal loan
    Submitting the correct documents goes a long way in getting your loan request fulfilled. The list of documents required for personal loan usually includes the following:

    • Salary slip to confirm your monthly earnings
    • Bank statement for the last 3 to 6 months to show that salary is being credited to your account
    • Proof of employment
    • Identity proof and address proof to fulfil required KYC norms
  4. Choose a loan amount that you can service easily
    Most respected financial institutions will offer an online application for personal loans; however, you may chose to approach them by phone or by visiting the nearest branch office. The online process is generally the shortest and offers the most convenience and typically comes with an immediate confirmation. On receipt of the confirmation, you can fill in the details of the amount of loan sought, specify the term of the loan and choose the method of repayment. It is necessary to note that non-payment or delayed payments may attract charges and will hurt your credit score. When you have a bad credit score, you will be able to better assess your chances of a personal loan based on your income and the interest once you calculate your EMIs. If you can prove that you be able to pay your EMIs on time, lenders may still consider your application for a personal loan.
  5. Be aware that you may be charged a higher interest rate
    The interest rate for a personal varies from 12% onwards, depending on the lender and the current market. However for personal loan applicants with bad credit, you can expect the interest rates to be 14% and higher. By diligently paying your EMIs in a timely manner, you may be able to negotiate your interest rate to a lower percentage.

Bajaj Finserv provides personal loans and offer easy repayment options based on your needs. In fact, these personal loans can even be tailored for your needs to ensure your financial comfort. With competitive interest rates and loans up to Rs. 25 lakhs on offer Bajaj Finserv seeks to help you achieve your goals.

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