If you have a bad credit score in India, getting a personal loan can feel like an impossible task. While most first-time borrowers believe that getting a personal loan with a bad credit score is impossible, this is only part of the truth. If you have a poor credit history, getting a personal loan is definitely possible. Still, there are specific steps and tips you need to follow diligently in order to get your personal loan application approved. 

If you are a borrower in India with a bad credit score and looking for a personal loan, this article is for you. In today’s article, we will tell you exactly how you can get a personal loan in India, even with a bad credit score. Let’s get started.

Gather All your Personal Information

One of the first things you need to focus on when applying for a personal loan with bad credit is to gather all your personal information. The reason behind this is simple; think from the perspective of a potential lender and try to understand the various views they will be taking into account while approving your loan application. As you might already know, one of the first aspects taken into consideration by most lenders is your credit score, as it is a clear indication of your creditworthiness. However, since you have a bad credit history, you are essentially limiting the avenues through which the lender can determine if you are creditworthy or not, thus naturally emphasizing the other factors the lender might consider, among which the most important is your personal information. 


In the personal information category, there are several aspects that you will need to gather and share with the lender–this  includes:

Your Credentials

In India, whenever you apply for a personal loan, there are some standard personal credentials your lender will request, and these are:

  1. Your name
  2. Your date of birth
  3. Your PAN Card number 
  4. Your Aadhar ID
  5. Your registered phone number (the same as linked with your PAN, Aadhar, and your bank account)

Your Income Credentials

Second, to your personal credentials, you will need to share your income credentials with your lender, and this will include

  1. Your latest 3 months to 6 months bank statement depending on the lender
  2. Your salary slip for the past 3 months if you are a salaried employee
  3. Your income certificate or ITR returns if you are a self-employed professional
  4. Your monthly in-hand salary (generally needs to be ₹13,500 in case of salaried professionals and ₹20,000 for self-employed professionals)

Once you have collected all these details, please share them with the lender and start the application. Since you lack a good credit score in this scenario, a general rule of thumb to follow will be to cross-check and reference all the information requested by the lender before you proceed to submit. The reason behind this is simple and yet fascinating; you will be surprised to know that most personal loan applications get rejected because the borrower fails to share the correct information with the lender.

Thus, make sure that you are sincere and transparent with the lender in this step.

Establish a Good Rapport with your Lender

Once you have shared all the required information with your lender, the next step is to establish a lender relationship. In this day and age of digital transactions, where most lending institutions have online application processes, this step might feel out of place; however, its importance cannot be neglected. 

In order to achieve this, make sure that once you have completed your application, you reach out to an authorized representative of the lender. You can reach them through email or by calling their office. Once you get in touch with a key decision-maker, start establishing a relationship by following the outlined steps.

  1. Introduce yourself and share either your customer ID or relationship number provided by the lender. 
  2. Explain the reason as to why you need a personal loan at this point, while simultaneously explaining the spending area of your loan.
  3. Follow the above steps by sharing why you have a low credit score and how you plan to improve it in the near future.

While all these steps might look lenient at first, it goes without saying that if done right, these can go a long way in helping you establish a great relationship with your lender, and subsequently getting your personal loan application approved, even though you have a bad credit score.

Prove you can Pay Back your Loan

The next step in the process is to prove to the lender that you can pay back the loan. Whenever any lender gives out a loan, one of their primary goals is first to make a profit (that makes money on loan), and second is to keep their aversion to loss as low as possible. Because simply put, any lender will want to avoid the possibility of incurring a loss by giving out a loan. 

In this scenario, since you lack a good credit score, the lender is impaired in understanding if you will pay back your loan on time and is thus hindering the approval of your loan application. However, if you find a way around and can prove to the lender that you will pay back the loan on time, the chances are that your application will get approved quicker than you expected. 

You can achieve this by following either of two steps:

  1. You can prove to the lender that you have enough alternate income sources to pay back your loan. This can either be in the form of sharing your latest bank statement, which displays the inflow of revenue from various sources or sharing your most delinquent ITR returns, which is proof of the total amount you earn every year. 
  2. Apply with a co-borrower. The second method is to apply with a co-borrower. Via this step, you are essentially indicating to the lender that they have a backup payee if you fail to pay back your loan—the reason this step is a tried and tested method is simple. When two borrowers co-jointly apply for a loan, the lender essentially considers both their credit histories and income to approve the loan. Thus, if your co-borrower has a good credit score and a consistent income, it will positively impact your loan application, thus granting quicker approval.

Ending Lines

Finally, one of the best ways to get a personal loan with a bad credit score is to apply for a secured loan. All you have to do in this step is to pledge any high net value asset or collateral with the lender along with your loan application. Thus, check with your lender if this process of application is available.

If you need a personal loan in India with a poor credit score, go ahead and follow these steps, and you will get your application approved in no time. All the best!

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