Tips for Acquiring a Personal loan with a Credit Score of 550

Aa credit score plays a crucial role in personal loan processing as it reflects your credit worthiness. If you’re looking for a personal loan with a credit score of 550, you likely have an idea of what your credit score is. Unfortunately, the credit score of 550 falls under the category of bad credit score as the score above 750 is considered as a good one.

But don’t worry here are the few strategies through which you can buy yourself a personal loan with a credit score of 550:

1. Start rebuilding your credit

If you have a credit score of 550, you’re just a few points away from a “fair” credit score. It might be worth it to take some time improving the credit score.

2. Get quotes from personal loan lenders

If you can’t wait to improve the credit score, you can try reaching out to lenders that offer personal loans with a credit score of 550.

3. Prove that your income can support EMI payments

If you can talk to the lender that you have a stable job and steady income, they are more likely to consider you for a personal loan despite a poor CIBIL score. However, you may have to pay a higher interest rate when you prove your eligibility in this manner.

4. Apply for a lower personal loan amount

From a lender’s point of view, these are indicators that you may default on the loan repayment. If you apply for a low amount of a personal loan, a lender may feel more comfortable sanctioning the loan to you, as a lower amount is easier to repay.

5. Apply with a co-applicant or secure a guarantor

In case of a low CIBIL score, you can apply for a personal loan by involving a co-applicant or a guarantor. The key benefit here is that if the personal loan lender finds the co-applicant or guarantor to have a stable income and a better credit score, they are certainly more likely to grant you a personal loan.

6. Correct mistakes in the credit report

The CIBIL report may contain some errors.

Tips for getting a Personal Loan at Attractive Interest Rate

Here are the few tips which may help you to at a low rate of interest.

  • Loan Repayment Term:- The loan repayment tenure plays a significant role in the offered interest rate. If you opt for the short loan tenure, then usually the higher interest rate is charged in comparison to loans offered for longer tenures. Try to choose the long loan repayment term.
  • Credit Score:- To get a personal loan at the low-interest rate it is crucial to have a credit score of 750 or above. This is considered a good credit score and attracts a low-rate of interest on personal loans.

Originally published at https://ajit11.kinja.com on January 14, 2020.

I am a diligent and motivated self-worker with 3+ years of experience working in credit review and loan processing within the financial tech industry.