5 Brilliant Ways to Avail a Personal Loan with a Low Credit Score

Are you spending sleepless nights wondering how to meet your immediate expenses?  Well, you can avail a personal loan anytime, even with a low credit score, to solve that problem. A personal loan is the primary source of finance that helps people meet emergency expenses like medical bills, debt consolidation, home renovation, wedding, and more.

But, before learning about the different ways of availing personal loan with a low credit score, you need to understand how personal loan and your credit score are related. The beauty of personal loan lies in the fact that you do not require hedging it with any asset as security or collateral. In short, a personal loan is unsecured. However, the unsecured nature of this loan prompts financial institutions to evaluate the risks associated with every personal loan application. This is where the concept of your credit score comes into play.

All financial institutions rely on your credit score to determine if you can repay a loan fully. Prepared by credit rating agencies, the credit score is a summary of your overall credit history. Your credit history is an account of the amount of credit you hold, the modes of payment you opted for, the frequency and regularity of payments, etc. Such information helps lenders judge how risky it would be to grant you a loan.
This discretion is even more critical in case of personal loan since it is unsecured.

Availing a personal loan with a low credit score is not a far away dream. Personal loan for credit defaulters is not an impossible feat. Here are a few ways of availing a personal loan with a low credit score.

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Aiming at a lower personal loan amount
If you want an urgent loan with low credit score, it is an excellent option to aim low. This is because financial institutions consider hefty loan amounts risky. High loan amounts often indicate chances of default. Financial institutions can comfortably grant you a personal loan with no credit check if you aim low. Applying for low loan amounts would make you a low-risk borrower.

Proving your earning potential
You can avail a personal loan with a low credit score if you can prove that you have an additional income source or have received a salary hike. Financial institutions may have a personal loan for credit defaulters if they have a consistent income and a stable job. The only price you have to pay, in this case, is a higher rate of interest since you are alternately proving your personal loan eligibility.

Arranging for a guarantor or a co-applicant
Grabbing a personal loan with no credit check becomes more comfortable when you involve a guarantor or a co-applicant. This is because, the consistent income of the co-applicant or guarantor mitigates your low credit score. Financial institutions, thus, consider granting you a personal loan less risky. You must have good terms with the person since he or she would require completing and signing KYC documents.

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Requesting for an NH or NA in your credit report
NA (person with credit score "not available") and NH (person with "no credit records") scores are not viewed negatively by financial institutions. Such scores mean that there are no previous records of credit activity, or it is absent in the last three years. This may result in a scenario that you may not have any credit score. Such a situation may convince the lender to grant you a loan without credit score or a personal loan with no credit check.

Rectifying your credit report
To err is human. Credit rating agencies indeed calculate credit scores, but human employees work on them. There runs a chance that your low credit score is the result of a wrong calculation or backdated information about your credit history. You are advised to keep track of your credit score. Many financial institutions offer online tools for checking it free of cost. You must stay aware of your current credit score and update financial institutions on your improved creditworthiness. Thus, you can avoid the undesirable situation of an incorrect score affecting your chances of getting a personal loan. However, the loan granted under such circumstances often attracts higher rates of interest.

Apply for a personal loan online
A personal loan requires minimum documentation, involving basic KYC documents. These include ID and address proofs, and income proofs, which, in most cases, are your salary slips. Apart from offline applications, you can apply for a personal loan online by submitting the soft copies of these documents. Once the documents get approved by the financial institution, the amount gets disbursed in a few hours.

ALSO READ: Availing Personal Loans Just Became Super Easy with Digital Lending

Conclusion
The above-mentioned ways can help you get a personal loan with a low credit score. You can avail pre-approved personal loan from financial institutions since such offers reduce the turn around time by several hours. You just have to wait till the hassle-free verification process gets completed before the sanctioned amount is credited to your account. Speedy disbursal and brief verification process have aptly earned personal loan the name of “emergency fund”.