Personal loan: Can you get approved with a 450 credit score? Find out | Mint

Personal loans are unsecured loans which provide you with quick access to funds for your personal needs. Since personal loans do not require collateral, the eligibility criteria for loans are highly dependent on the credit score as well as your income. Hence, if you have a low credit score, your chances of getting a personal loan approved are quite low.

Understanding credit score

A credit score is a 3 digit score issued by RBI authorised credit bureaus which usually ranges between 300 to 900. These credit scores are a reflection of your spending habits as well as your credit history which builds over time.

A low credit score indicates that you have not been a regular and disciplined borrower and have been a defaulter in your previous debts. Hence, a low credit score lowers your chances of securing a loan at a nominal interest rate as it increases risk for lenders to get the repayment of the loan within time.

Can you get a personal loan with a 450 credit score?

A simple answer to this is, Yes. You can get a personal loan with this credit score. A credit score of 450 means that you have a poor credit score with high credit utilisation ratio and you have been a regular defaulter in your past while repaying EMIs or credit card bills. In this case, you become a high risk borrower for the lender to grant you a loan.

However, you still can get a personal loan in this case. Some lenders can offer you a personal loan, however, the interest rate will be enormously high along with a shorter repayment period. In some cases, you may even be asked to provide collateral. Hence, in such cases, the EMI will be extremely high and skyrocketing.

Tips to get a personal loan with a 450 credit score

Take secured loans: Getting a secured loan with collateral will help you improve your chances of securing a personal loan as it will provide security to the lender. Secured loans will also attract lower interest rates as compared to a regular personal loan.

Show stable income:If you are able to prove that you have a regular income and stable employment, this can help you show your creditworthiness and that you are capable of repaying the loan on time. Along with this you can also disclose your investments and assets to make your profile even stronger.

Apply with a guarantor: You can also apply for the loan with a guarantor who has a better credit score along with a higher income which will make your profile stronger and more secure for the lender.

Opt for smaller loan amounts: Applying for a smaller loan amount can also improve your chances because this way the lender has a lesser risk factor to get back the money on time as well as it will be a lesser burden for you to repay the loan at the same time increasing the credit score.

In conclusion, you must always be extremely careful about your credit score as it helps you in securing lower interest rates as well as your desired loan amount without any hindrance. With a low credit score, you may get personal loan offers, however, you must first evaluate the EMIs as well as decide whether you are capable enough to afford the loan amount as well as the EMI. With this you can make informed decisions and avoid any financial traps.

(Note: Raising a personal loan has its own risks)