How to Get a Personal loan/Home Loan with a Low Credit Score?


  • Having a low credit score? Don’t worry, you can still get a personal loan or home loan
  • Read this post that guides you to take these loans in such a case

A low credit score almost shuts the door for people wanting to get personal loans or home loans. The low score is an indicator of your inefficiency in paying off your debts and makes lenders wary of trusting you with any new credit. So, if you are having a credit score way below 700, your personal loan or home loan aspirations can take the backseat for a while. But only for a while and not forever, this will give you some hope! There are ways by which you can get these two loans even if the credit score is on the lower side. But before that, you must look at your credit report which will guide you better.

Credit Report – Why Is It Important for You to Look at?

The credit report tells you the exact reason for which your credit score is on the lower side. Now, the report could attribute any of the following as the reason for a poor credit score.

  • Payment skips or defaults
  • Using a heavy chunk of your credit card limit
  • Multiple credit applications despite rejection
  • Failing to Maintain Reasonable Gaps between Two Credits
  • Debt Settlement

Check the reason that your report is pointing at. Start working on that to improve your score over time.

Free CIBIL Score Check

How Should You Go for a Personal Loan If Your Credit Score is Low?

Loans like personal loans are more for immediate purposes, hence you can’t wait for long. So, the option left for you is to go for a secured loan against your fixed deposits, public provident fund (PPF), national savings certificate (NSC), whatever you may have. Loans are given at around 80%-90% of the value of the collateral so submitted. The best part is that this sort of loan comes at a lower rate of interest compared to personal loans. But if you are seeking funds for a purpose like marriage slated to happen in a couple of years from now, maybe you can wait, get your score up and pouch a collateral-free personal loan.

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Apply Personal Loan @ 10.75%* Rate

How Should You Go for a Home Loan If Your Credit Score is Low?

When it comes to a home loan, the credit score criteria won’t be that stringent as in the case of personal loans. A low credit score may not deter many lenders from disbursing home loans to borrowers. But too many dark spots in your credit profile can break your case. For instance, a regular patch of payment skips or defaults coupled with debt settlement can force either a rejection or delay.

Apply Home Loan @ 8.65%* Rate

Debt Settlement defines itself- it’s an option that you might have exercised to reduce the overall debt burden. It might not have dragged down your score, but could create a bad impression of yours before the lender, which could reject your home loan application citing debt settlement as the reason. Even as the lender approves your home loan, the interest rates will most likely be higher. It could add more to the spread over the benchmark rate than it does to someone with a better credit record.

Minimum Credit Score That Lenders Seek to Approve Your Personal Loan/Home Loan Applications

Personal loans being unsecured can be given even with a credit score of 700 and above. However, having a score of more than 750 doesn’t leave any scope for rejection! Home loans, on the other hand, can be granted with a score even below 700. But too many dark spots can break your case as pointed out above.

Personal Loan Interest Rates March 2024
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
SMFG India Credit12.00% - 24.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates March 2024
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.70%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%