Having a low income does not have to be an obstacle when getting a personal loan. Personal loans are unsecured loans that you can use for different purposes, such as medical, education, travel, and wedding expenses, to name a few. You do not need a guarantor or collateral to get this type of loan. What is important is your credit score, as it is one of the first things that lenders look at before they move ahead with the approval process.
When it comes to personal loans, the most common eligibility criteria are
The applicant’s credit score.
The applicant’s income/repayment capacity.
The applicant’s age.
The required loan amount.
Role of Credit Scores for Personal Loans
The credit score of the applicant is one of the most important criteria for personal loans. If you have a good credit score, it helps you in qualifying easily for a loan at a lower interest rate, a longer tenure, and for a larger amount.
On the other hand, you will have difficulty qualifying for a personal loan if you have a bad credit score. Even if your loan is approved, you will not get a favorable interest rate or other loan terms. Fortunately, you can apply for low income personal loan for bad credit from financial institutions other than banks.
How to Get a Personal Loan with a Bad Credit Score
Although an applicant with a bad credit score is usually not approved for a personal or any other loan, there are certain tips you can follow to get a personal despite having a bad or low credit score.
Apply with a co-applicant. Provide your proof of repayment capacity. Improve your credit score by repaying existing liabilities or dues, keeping the credit utilization ratio in check, and paying any further EMIs or credit card dues. Apply through alternate loan providers. Lower the loan amount you have applied for. Pledge collateral or security.
These simple measures can help in improving your credit score, after which you can easily get a personal loan from any lender.
Although it is difficult to apply for low income personal loan with bad credit, it is not impossible. You just need to take the necessary steps to improve your credit score and find a lender that will approve your application despite your bad credit. The best way to find such a lender is to search online and pick a reputable one with a good reputation and a history of being fair and reliable.