A low credit score can make it difficult to secure a loan, let alone a high loan amount. However, it’s not impossible! Many lenders consider other factors beyond your credit score. With the right approach, you can increase your chances of getting approved for a higher loan amount. Let’s explore the best strategies to achieve this.
A credit score (typically ranging from 300 to 900) is a measure of your creditworthiness. Lenders use it to assess your repayment history and risk level.
| Credit Score Range | Loan Approval Chances |
|---|---|
| 750 – 900 | High – Easier loan approval, lower interest rates |
| 600 – 749 | Moderate – Possible approval, but with higher interest rates |
| Below 600 | Low – Difficult to get a loan, limited options available |
A low credit score indicates missed payments, high debt levels, or poor financial management, making lenders hesitant to offer large loans.
✅ If your credit score is low, apply with a co-applicant (spouse, parent, or friend) who has a strong credit history.
✅ A guarantor assures the lender that the loan will be repaid, reducing the risk.
✅ Secured loans (backed by collateral like property, gold, or fixed deposits) are easier to obtain even with a low credit score.
✅ Lenders feel more confident approving a higher loan amount when they have security.
✅ Non-Banking Financial Companies (NBFCs) and digital lenders offer loans even to individuals with poor credit scores.
✅ They focus on income, employment stability, and repayment ability instead of just the credit score.
✅ A steady income from a stable job or business increases your loan eligibility.
✅ Submit documents like salary slips, tax returns, and bank statements to assure lenders of repayment capability.
✅ If you have multiple loans or high credit card balances, pay them down before applying for a new loan.