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How to Get A Personal Loan Online With a 650 Credit Score?
Whether you’re facing an unexpected medical expense, planning a wedding, or simply looking to make a significant purchase, an instant personal loan can provide the financial support you need. However, obtaining a personal loan often hinges on your credit score, which acts as a key indicator of your creditworthiness.
Table of Content
- What Happens If Your Credit Score is 650 or Lower points?
- Tips to Get a Loan With a Credit Score of 650
- Tips to Improve Your Credit Score
A good credit score, typically ranging from 740 to 799, significantly enhances your chances of securing a loan at good terms. But what if you have a low credit score of 650?
Well, there is no doubt a credit score of 750 or more will get affordable and fast financing. However, you can get a loan even with a less-than-ideal credit score. Read on to understand how.
What Happens If Your Credit Score is 650 or Lower points?
If you have a credit score of 650 or less, you will have some hurdles while applying for a personal loan, including:
- The lender will consider you a risky and may not approve your loan application.
- If the loan application is approved, you may be offered stringent loan terms, including high interest rates.
- The lender may ask for collateral, over and above the high interest rate charged.
- You may have to accept loans from small or private lenders with irrational demands.
- You may also lose your pledged collateral in case you are unable to repay the loan.
Tips to Get a Loan With a Credit Score of 650
If you are wondering how to apply for a personal loan with a credit score of 650, then here are a few tips that will help you:
-
Provide Proof of Good Income
Showing that you have a stable and good income stream will help assure the lender that you have the means to repay the loan, increasing your chances of getting a loan. Some lenders may also ask for proof of stability and security to understand the risk in giving you loan.
-
Apply With a Co-Borrower
Another way to get an instant personal loan with a low credit score is to apply with a co-borrower. Co-borrower loan applications are easily approved as the other person will be responsible for repayment in case you are unable to pay EMIs, hence reducing the risk for the lender. You have your spouse, parents, children, or relatives as your co-borrower.
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Request for NH/NA Credit Report
An NH/NA credit report means that there is no credit history or credit available. If you are someone with NH/NA on your credit report, you can explain the reason and request the lender to consider your application as a new borrower.
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Borrow a Lower Amount
A low credit score for a personal loan makes you a risky applicant, as the lender assumes you may not be able to repay. To offset this, you may have to agree to a lower amount when applying with a 650 credit score.
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Settle for High Interest
Since you have a low credit score, be prepared to get higher interest rates. While this may not be ideal, it can be a necessary compromise if you need funds on an urgent basis. Responsible and timely repayment of loans will help improve your credit score over time. Consider using an online personal loan calculator to know your monthly EMI and manage them better.
Suggested Read: No Income Proof? Here's How To Still Get A Personal Loan Online
Tips to Improve Your Credit Score
Now that you know how a low credit score reduces your chances of getting a personal loan, here are some proactive steps you can take to improve your credit score:
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Make Timely EMI Payments
Making timely EMI payments is one of the best ways to improve your credit score. Late payments can significantly impact your credit score, that’s why set automatic payments so that you never miss a due date. Also, before taking a loan, consider using an online personal loan calculator to know your monthly EMI and whether you will be able to manage that or not.
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Avoid Applying for Loan Frequently
Each time you apply for a loan, a hard inquiry is made on your credit report, which can lower your score. That’s why, you should limit the number of loan applications you submit, and only apply when you're confident about meeting the loan requirements.
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Do Periodic Checks
Regularly review your credit report for errors or discrepancies. Dispute any inaccuracies you find, as correcting them can lead to an immediate improvement in your score.
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Keep a Low Utilization Score
Aim to maintain a credit utilization ratio below 30%. This means using less than 30% of your available credit at any given time.
Overall, getting an instant personal loan at a low credit score will come with a series of obstacles, but it is not impossible. By following the tips mentioned in this blog you will be able to get a personal loan and start to slowly improve your credit score.
Suggested Read: Getting A Personal Loan Online With A 700 Credit Score
If you are looking for a personal loan with competitive rates, consider Muthoot Finance. With flexible repayment plans, attractive interest rates, and easy documentation and eligibility, we are a brand you can trust. To apply for a personal loan, visit our website or your nearest Muthoot Finance branch.
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