While a credit score of 600 shall make it more challenging for you to secure a personal loan, it does not make it impossible. Securing a personal loan with low credit score is usually difficult, as banks and NBFCs consider at least 700 or above to approve personal loan applications. It is necessary to make certain credit improvements before applying, to improve your chances of loan approval.
Few lenders do offer personal loans to individuals with low credit scores, but these often come with higher interest rates and shall require assets to be kept as a collateral. At Paisabazaar, you can search and compare lenders based on your credit profile to find personal loan offers that suits your financial requirements.
Applying for a Personal Loan with a 600 Credit Score
As the loan options are limited with a credit score of 600, you need to take apt measures before applying for a personal loan with lending institutions as discussed below:
1. Improve your Credit Score
Your credit score is the most crucial factor that lenders check while offering funds. As your credit score is 600, so it becomes your foremost priority to improve it and be more creditworthy. To enhance your credit score you need to clear all your existing debts by paying all your EMIs and credit card dues in time and check your credit report regularly for errors or inaccuracies. If you are a New-to-Credit (NTC) individual, then you may start building your credit history by applying for a secured credit card or loan against fixed deposit.
2. Search for Flexible Lenders
There are few NBFCs and registered digital lenders, specialising in offering personal loans to individuals with low credit scores. These lenders are usually more flexible with their credit requirements but offer personal loans at higher interest rates, processing fees, foreclosure/prepayment charges, etc. Therefore, check and compare loan terms, interest rates and fees from multiple lenders to get the best-suited personal loan.
3. Consider Applying for a Lower Loan Amount
If you apply for a smaller loan amount, lenders may view your application more favourably. With a credit score of 600, requesting a smaller amount may increase your chances of loan approval, as it depicts a lower risk to the lender.
4. Consider Secured Loan Options
If possible, consider offering collateral to the lending bank or NBFC to help reduce their risk when offering you a personal loan, especially for smaller amounts. Collateral can be offered in various forms, such as fixed deposits, savings accounts, secured credit cards, or even gold. By offering collateral, personal loan becomes a secured loan, which is usually considered as less risky by lenders and shall enhance the chances of loan approval.
How to Improve Your Credit Score if It Is Just 600?
With a credit score of 600, you can improve your creditworthiness by taking the following steps:
- Opt for secured credit card or loan against FD or savings account to build credit history
- Check your credit report regularly for errors and report at the earliest
- Payoff all your EMIs and credit card dues in time and avoid any delays
- Do not overspend from the assigned credit limit, if any
- Avoid multiple credit applications simultaneously or in shorter duration
- Do not close down your older bank accounts or credit cards
FAQs
Can I get a personal loan with a 600 credit score?
Yes, you can secure a personal loan with a 600 credit score, but it may come with certain limitations, such as higher interest rate, lesser amount and shorter repayment tenure.
What is the average personal loan interest rate offered if my credit score is 600 or below?
The personal loan interest rates offered by lending banks and NBFCs shall be on higher side, if your credit score is 600 or below. However, the rates usually depend on various factors, such as your income, credit profile, employment stability, lender’s internal policies, current market conditions and economic factors.
How much loan amount can I get with a credit score of 600?
With a credit score of 600, the loan amount you can qualify for depends on various factors that include your income, credit profile, job stability, employer’s profile, repayment capacity and relationship with the lending bank, NBFC or any financial institution.
Is 600 a good Credit score?
A credit score of 600 is generally considered low and not favourable by most lenders. While it may still help, you qualify for a personal loan or credit card, approval is often limited to higher interest rates and lesser loan amounts.
Can I get a personal loan if my Credit score is 650?
Yes, you can avail a personal loan with a credit score of 650, which is considered fair or average by various lending institutions. However, you need to pay more on interest rates and compromise on the loan amount and repayment tenure.
How does a credit score of 550 affect my chances of personal loan approval?
Credit score of 550 is considered low by most of the lenders and the approval chances are also minimum. However, you may qualify for a personal loan from a few lenders but at higher interest rates.