Can People Get a Personal Loan With Bad Credit?
Yes, people can get a personal loan with bad credit, but it typically requires more effort, and the terms may not be as favorable compared to loans for those with good credit. Many lenders are cautious with applicants who have low credit scores because they represent a higher risk. However, there are specific strategies and choices of lenders that can improve the chances of loan approval for borrowers with bad credit.
How to Get a Personal Loan With Bad Credit
Look for Specialized Lending Institutions
Traditional banks tend to have strict lending criteria, making it difficult to secure loans with bad credit. Specialized lenders like Non-Banking Financial Companies (NBFCs), credit unions, and peer-to-peer platforms are more flexible and cater specifically to borrowers with poor credit scores, offering faster approval and better terms.
Consider a Secured Loan
Using an asset as collateral can improve your chances of approval since it reduces the lender’s risk. Even with a low credit score, secured loans are often easier to obtain, but borrowers should have a solid repayment plan to avoid losing the collateral.
Compare Multiple Loan Offers
Shopping around and comparing different lenders can help find loans with the lowest interest rates and best terms available to applicants with bad credit.
Pre-qualify Without Impacting Credit Score
Some lenders offer pre-qualification with a soft credit check, which does not harm your credit score. This allows you to see your potential loan terms before officially applying.
Improve Your Credit Score Over Time
While not an immediate solution, working to improve your credit score through timely payments and reducing debt could enable access to better loan options in the future.
FAQ – FREQUENTLY ASKED QUESTIONS
What is considered a bad credit score for personal loans?
A credit score below 600 is generally considered bad, though exact thresholds vary by lender.
Can I get an unsecured personal loan with bad credit?
It's more challenging, but some lenders do offer unsecured loans to those with bad credit, often at higher interest rates.
What interest rates can I expect on personal loans with bad credit?
Interest rates can be significantly higher, sometimes up to 35% or more, depending on your credit and the lender.
Are peer-to-peer lending platforms a good option?
Yes, they can be more flexible and sometimes offer better terms for people with bad credit.
Will applying for a personal loan hurt my credit score?
Pre-qualification usually involves a soft inquiry that doesn't impact your score. However, the formal loan application triggers a hard inquiry, which might cause a small, temporary drop.
Is it better to get a secured loan if I have bad credit?
Yes, secured loans are often easier to obtain because they are backed by collateral, reducing the lender’s risk.
Published on: July 24, 2025
Published by: PAVAN
www.vizzve.com || www.vizzveservices.com
Follow us on social media: Facebook || Linkedin || Instagram
🛡 Powered by Vizzve Financial
RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed