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GuidesPersonal LoansA Guide: Bad Credit Loans in India: Finding Alternatives When Your CIBIL Score is Low
LAST EDITED BY SHEFAALI BOPANA ON MAY 19, 2025.
Personal loans are handy when stranded for cash and can’t meet immediate needs. Readily available, these loans are easily sanctioned and disbursed. However, the story is quite different if you have a poor credit score. This is where bad credit personal loans become the ultimate saviour.
Urgent loans with bad credit in India are specifically designed for individuals with a low or no credit score, helping them access funds despite financial setbacks. Many lenders hesitate to approve loans for those with poor credit due to the increased risk of default.
Since a low credit score signals weaker repayment capacity, individuals with bad credit often struggle to find lenders willing to offer them a loan. However, several financial institutions and NBFCs provide urgent loans with bad credit in India, ensuring quick access to funds during emergencies.
Have you been wondering how to get a personal loan with bad credit in India? There are quite a few alternatives to traditional loans.
A CIBIL score, short for Credit Information Bureau (India) Limited score, is a three-digit number between 300 and 900 that represents your creditworthiness, reflecting your ability to repay debts. It matters because lenders use it to assess your risk, influencing loan approvals, interest rates, and other credit terms.
The CIBIL score acts as a lender's first impression of a borrower—higher scores improve the chances of loan approval. However, the final lending decision rests entirely with the lender, as CIBIL does not influence whether a loan or credit card is sanctioned.
Typically, a CIBIL Score around 700 is considered good.
Your credit score may be low due to the following reasons:
Bad credit loans should only be considered in urgent situations, such as:
It's good to know the different types of personal loans before trying to apply for one. This article on the different types of personal loans should be a helpful one, give it a read!
Your credit score is the barometer of your creditworthiness. Lenders use this 3-digit score to determine your credibility and sanction loans. Missing credit card payments, defaulting on loans, breaching your credit limit, and existing loans can all lead to a poor CIBIL score.
Moreover, did you know the absence of credit history also bundles you with poor CIBIL score applicants? In both cases, your poor credit score disqualifies you from securing funding. However, the good news is that there are still ways of meeting your immediate funding needs.
Here’s how you can get a personal loan with bad credit:
Secured personal loans don’t consider your credit score since the loan amount is sanctioned against collateral. Pledging your asset lowers the lender’s lending risk since the lender can repossess these assets if you fail to repay the loan.
As for the assets allowed, you can use fixed deposits, gold, property, insurance, mutual funds and PPF to secure such loans. However, remember that lenders have specific guidelines regarding the maximum loanable amount and tenure vis-a-vis the type of asset pledged as collateral.
A payday loan is a short-term unsecured loan sanctioned to help salaried employees meet immediate cash needs until their next salary is credited. The approved loan amount is lower than your salary and can be used to meet small expenses like paying your rent or electricity bills. If you need high-value funding, such loans might not be viable options.
You can also get small ticket personal loans up to ₹5 Lakh via peer-to-peer lending websites. These websites match prospective lenders and borrowers, mediating between the two to facilitate the loan process. The interest rates and loan tenure is decided mutually by the two parties. Since regulatory bodies are involved in peer-to-peer sites, complete funding security is guaranteed.
If you have a good relationship with your current lender, you can get a bad credit personal loan tailored to suit your needs. This option is ideal if you're a first-time borrower holding a salary account with the lender and receiving regular payments.
Non-Banking Financial Companies (NBFCs) offer more lenient loan terms than regular banks, with some sanctioning personal loans to those with a credit score below 700. While the interest rate is slightly higher, getting a bad credit personal loan from an NBFC should be easy if you can prove a steady income with a good employment history.
Much like NBFCs, Fintechs have an easy eligibility checklist. These digital lenders operate through the web and mobile apps to offer hassle-free, instant-approval loans to borrowers with poor or no credit scores. Since the entire process is online and lightning-fast, applying for such loans takes just a few minutes.
You can hop onto the Fi app, apply for Instant Loans, and receive money in minutes once approved.
With the overdraft facility, you can withdraw more than the amount available in your bank account. You can then use this sum to meet immediate cash needs. While most banks offer this facility on current accounts, some even extend it to their salary accounts.
CIBIL score is considered as the lender's first impression of a borrower, hence having a score above 700 improves the chances of loan approval.
Here are few ways ways to improve your CIBIL Score:
Read to know more on how to improve your CIBIL score
These credit alternatives can help you get a personal loan with a bad credit score and easily sail through tough financial times. However, they might force you to wager assets and pay higher interest rates. Thus, improving your credit score and applying for a new loan is advisable.
Once you’ve improved your credit score by repaying dues on time, you can check for pre-approved instant loans up to ₹5 Lakh on the Fi Money app. From a paperless application process and competitive interest rates to automatic in-app EMI payments and Fi's Instant Loans bring you benefits you've never seen before.
Borrowers with a credit score of less than 700 can apply for bad credit personal loans. First-time borrowers without a credit history can also apply for such loans.
You can approach your existing lender, an NBFC, peer-to-peer lending platforms, or digital Fintech to apply for such loans. Depending on the lender and type of bad credit loan you pick, you might have to pledge collateral, list a co-signer, or prove steady income to sanction the loan.
The amount of money you can borrow with bad credit will vary depending on several factors, including the lending institution's policies, your income, the purpose of the loan, and the specific circumstances of your credit history. Generally, with bad credit, you may have access to loans with lower borrowing limits and higher interest rates compared to individuals with good credit. It's best to consult with lenders directly to understand the specific loan options available to you.
Here are some reputable personal loan companies in India for individuals with bad credit:
