December 8, 2023


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How to get a loan despite a poor credit score

I am in urgent need of a personal loan as I have to go through a medical procedure. But my loan is getting rejected by banks. I have been told it’s because of my poor credit score. Should I keep applying and see if anyone is willing or are there any other options?

-Name withheld on request

Unfortunately, getting a personal loan can be extremely difficult if you have a poor credit score, especially in the current situation as most banks and NBFCs, since the pandemic, have been cautious in giving out new loans and raised their eligibility criteria.

First, if not done already, check with the bank(s) where you have an existing relationship. Since these banks would have more data about your income, cash flows and spends, there are chances that they may agree to give you a loan. If you are salaried, contact the bank with which you have your salary account to see if you can get a loan. In case that doesn’t work out, check if you can take a loan against your credit card from your credit card issuer(s).

I would advise against applying for personal loans from other large banks and NBFCs with whom you have never transacted before. Getting a loan from them with a poor credit score is unlikely. Instead, you may explore smaller fintech, which still may provide you with a personal loan, albeit at a higher interest rate. But getting a loan for a large amount from them is again unlikely.

Other options can be secured loans, basis some collateral. If you have an ongoing home loan, you may apply for a top-up loan from your home loan issuer. If you have a property in your name, you can also explore getting a Loan Against the Property.

Gold loan is another type of secured loan that can be a quick and suitable alternative in case giving gold as collateral is an option. Certain lenders may also provide loans against securities like mutual funds, shares, bonds, ETFs, and various small savings schemes.

Naveen Kukreja is CEO and Co-founder,

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