Can I Get a Loan In India With a Credit Score Of 650? Here are some Ways.

In case you are planning to choose or opt for a loan or credit card with a credit score of 650, there are high chances that financial institutions.

Raju Choudhary

Can I Get a Loan In India With a Credit Score Of 650 Here are some Ways.
Can I Get A Loan In India With A Credit Score Of 650 Here Are Some Ways

In case you are planning to choose or opt for a loan or credit card with a credit score of 650, there are high chances that financial institutions may reject your application. In the case of a loan, if it gets approved, you may avail the approval at a higher rate of interest. Here in this article, we will discuss how you can avail of loans at a low credit score.

Can you avail of a loan with a low credit score?

A credit score is a 3-digit number that ranges anywhere between 300 and 900, whereas a good CIBIL score range anywhere between 750 and 900. For those with a low credit score of below 750, you still can apply for a credit option. It is up to financial institutions like banks and NBFCs to either approve your credit application or reject it. Also, it is crucial to remember that there is a chance that your application may be rejected, which will affect your credit score again. A lower score of below 750, if impacted again, may need you to work for many years to get a fair credit score of over 750. 

Usually, a low score impacts your loan approval procedure. The reason being many financial institutions prefer a score of over 750 to avail loan because it shows your financial health and potential to repay the loan. If you still apply for the loan with a low credit score, beware that you will require paying a higher interest rate against the acquired loan amount with lesser credit opportunities to cherish the same. There are chances when you need a loan, and, in these cases, you may connect to a lender for a loan with a low score.

What are the drawbacks of opting for a loan with a low score?

Applying for a loan with a low score of 650 is a big drawback. With low scores comes various other drawbacks attached. Thus, it is necessary for you to develop the habit of checking online credit scores through financial platforms. Doing this helps you know where you stand and what measures you should take to improve it. Various disadvantages attached are:


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  • Firstly, financial institutions may turn down your application based on your low score. Next, with a rejected application and several hard inquiries, your credit score will further fall.
  • In case you get a loan, you will have to repay a higher interest rate to compensate for the lower credit score.
  • An applicant may not be able to avail of the desired loan proceeds. For example, suppose Mr X applies for the loan of Rs 1 lakh but owing to his low score, he may be approved a loan of Rs 60,000 (approx.).

What are the major factors that impact your credit score?

A credit score of an applicant may get impacted owing to various reasons:

  • Irresponsible or poor repayment history
  • Mismanagement of CUR (credit utilization ratio)
  • A lot of hard inquiries
  • Delayed, missed, or partially settled repayments
  • Unhealthy credit mix
  • Issues with credit report info

How can you improve your credit score?

Like several factors that affect your credit score negatively, there are various ways to ameliorate your credit score too. Here are some of the good financial habits to improve your score:

  • Make your credit repayments on time
  • Avoid leaving outstanding balances
  • Do not make multiple hard inquiries
  • Try and maintain the correct balance between unsecured and secured credit options
  • Use credit utilization ratio (CUR) wisely
  • Raise dispute for mistakes or errors in your credit report for rectification
  • Build the habit to check your report at least twice a year

How can you avail of a loan with a low credit score?

While it can be a huge challenge to avail loan with a low credit score, it isn’t impossible to avail of one if you adopt the listed measures:

Show income stability to make sure you can repay your loan timely

If you hold a low credit score of 650, you can show a hike in your salary or reveal any additional income you earn to convince your lender that you hold a good repayment capacity. Also, you can try and accumulate evidence about job security with a stable income flow to ameliorate your scope of getting loan approval. However, you should be prepared for repaying a higher interest rate with a low score.

Try applying for smaller loan proceed

The financial institution looks at you as a high-risk applicant if you want a higher loan with a low credit score of 650. Financial institutions will assume that the probability of defaulting on a loan is much higher in these cases. On the other hand, if you request a lower loan amount, the lender might grant the request easily as repaying a lower loan amount is simpler than for a higher loan amount.

Opt for joint loan application or add in a guarantor

If you have a low score of 650, try adding in a co-applicant or a guarantor who holds a good credit score. Doing so helps you get your loan faster. While submitting with the guarantor or co-applicant, make sure that all KYC formalities are done and required signatures are provided on relevant loan documents. With a guarantor or co-applicant who has an excellent credit score, your application for a loan has higher chances of availing the approval at a better deal.

Check errors in the credit report

As you may now know, to avail loan at a low score of 650 may be difficult, and it may become further difficult if you have any error on your report. Thus, before you apply for a loan, ensure to conduct an online credit score check. Doing so will help you recognize if there is any error, discrepancy, or mistake in your report. Such errors are responsible for pulling your score down. Knowing such issues beforehand allows you to reach out to the concerned bureau or lender for rectification. A rectified credit report will automatically bring up your credit score in no time, which will further enhance your credit eligibility chances.

Raju Choudhary

Article by Raju Choudhary Raju has written 810 articles. If you like This post, you can follow CAknowledge on Twitter. Subscribe to CAknowledge feed via RSS or EMAIL to receive instant updates.


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