Securing a personal loan with low credit score is usually difficult, as banks and NBFCs consider a credit score of at least 750 or above to approve personal loan applications. A credit score of 600 is considered low, however there are few NBFCs and registered Fintech lenders who might offer personal loans to applicants with this credit score, but at higher interest rates, lesser loan amounts and strict eligibility criteria.
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, 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.
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
Secured loans against a collateral can be offered in various forms, such as loan against securities, gold loans, loan against property etc. A secured loan is usually considered less risky by lenders and even with a low score one can avail it.
How to Improve Your Credit Score if It Is Just 600?
As a credit score of 600 is considered low, so you can improve it and enhance 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 loan amount and strict eligibility criteria.
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, creditworthiness, loan amount, repayment tenure, and lender’s internal policies.
How much loan amount can I get with a credit score of 600?
The loan amount you are eligible 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 financial institution.
Is 600 a good Credit score?
A credit score of 600 is generally considered low and not favourable by several banks and NBFCs.
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, your options would be limited and would need to pay higher interest rates.
How does a credit score of 550 affect my chances of personal loan approval?
Credit score of 550 is considered poor 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.