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Personal Loans For Bad Credit – How to Avail it?

By Finserv MARKETS - Mar 2,2019
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Personal Loan for Bad Credit

Availing a personal loan can be one of the most difficult things in today’s time. It becomes even more difficult if you are someone with bad credit. Personal loans with low credit score is a pretty problematic position to be in and can adversely affect your loan application. Banks and loan institutions categorize individuals with bad credit as ‘most risky’. Since the lenders do credit checks before they sanction a loan, and since the report of these checks tends to go against them, lenders generally do not trust these borrowers to pay back the loans.

When you apply for a loan, the lenders look for certain factors such as your credit score, also known as the CIBIL score, which could range between 300 and 900. Various factors determine the scoring process. Any score below 600 is considered to be a bad credit score. In such situations, it gets difficult for applicants to procure Personal loan. You can also check CIBIL score for free using our smart financial health check tool.

Bad credit scores result from missing payment of loans. There are mainly three factors associated with the missed payments in the credit scoring system. These are:

  • How late have the payments been;
  • How long you have not missed any payment; and
  • The total number of payments in history.

The credit reporting bureaus put a negative remark with a notation on completion of 30 days of default. Suppose you took two months to get back on track on with the past due-debt, the account will show 60 days marked. Even after those loans have been repaid, they may persist in your account, and the lender will look at all those repayment histories before deciding whether or not you are worth giving loans too. It is possible to get rid of some public records from the report once you have managed to please the judgment or the lien.

One of the remedies to these kinds of situations is to apply for a Bajaj Finserv personal loan that does not require a credit check before sanction. There are certain loan plans which are available in the financial arena that allow individuals with bad credit to obtain personal loans for emergency needs. These loans do not require the borrowers to put up their residential property as security. A personal loan for bad credit is generally available for all kinds of borrowers and the reason can be cited as anything that is legally tenable.

But procuring personal loan for bad credit is not as easy as some lending companies tend to claim. Bad credit personal loans come with high-interest rates and usually tend to require a co-signer. They also come with a very short payback time. That is because lenders take the risk knowing that they are going to get the repayment in a very short time.

How Bad Credit Scores Affect Borrowing?

To be able to apply for an instant personal loan online you need to have a good credit score. Some lenders operate on the basis of what’s called ‘rate-for-risk’ pricing, where the rate you get depends upon the risk they think you represent of defaulting the payment.

A poor credit rating or score can result in:

  • Higher interest rates charged on the loan
  • Offered a smaller credit limit
  • Rejection of loan.

New loans affect more than just your CIBIL Score; they also reduce your ability to borrow. Your credit reports show all the details of your loan, as well as the required monthly payments. If you apply for a new loan, lenders will run a check on your existing monthly obligations and decide whether or not they think you can afford an additional payment. Taking out a new loan gives you the opportunity to make repayments and build up your credit. If you have a bad CIBIL Score or you have never yet established credit it will gradually improve over time with each monthly on-time payment.

Also Read: How to Get Personal Loans with Collateral

The Indian financial market also has certain provisions for people with bad credit. Usually, lenders in India treat it as a very dangerous affair to sanction personal loans for borrowers with bad credit ratings without a proper credit check. The State Bank of India and HDFC are unambiguous about their stance in this matter as they have unequivocally stated that they would not consider giving personal loans to borrowers with bad credit ratings. It is very difficult to find any fault with their stance as it becomes extremely difficult for such institutions to trust borrowers who no longer have any creditworthiness.

There are certain institutions in India which judge borrowers on the basis of their current financial situation instead of their financial history in case of emergencies. From these institutions, even if you have bad credit ratings, you can borrow between Rs. 10 thousand and Rs. 50 thousand for up to 90 days. You have to pay monthly EMIs during the repayment process. So, even if you have bad credit scores less than 600, it is still possible to procure a Bajaj Finserv Personal Loan in India in case of emergencies. Check Bajaj Finance Personal Loan Interest Rate at Finserv MARKETS to know your actual monthly outflow in EMI.

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522