Wed Jan 29 09:02:28 UTC 2025: **Lower Credit Score Doesn’t Bar Personal Loans, But Expect Higher Costs**

MUMBAI, INDIA – Individuals with credit scores below 700, even below 650, can still obtain personal loans, but they should expect higher interest rates and potentially smaller loan amounts, according to financial experts. Banks and fintech lenders will typically approve loans, but at a cost. For example, a loan that might be offered at 11.5% interest to someone with a good credit score could jump to 12.5% or higher for someone with a poor score. Bank of Baroda, for instance, advertises personal loan interest rates ranging from 13% to 18.25%, with the variation directly tied to the applicant’s credit score.

While securing a loan with a low credit score is possible, borrowers need to be aware of several factors:

* **Higher Interest Rates:** Expect significantly higher interest rates, leading to larger monthly payments.
* **Smaller Loan Amounts:** Instant loan platforms may offer smaller amounts. It’s crucial to verify that these platforms are regulated by the Reserve Bank of India (RBI) or partner with an RBI-approved Non-Banking Financial Company (NBFC).
* **Pre-Approved Loans:** Pre-approved offers often come with higher interest rates.
* **Credit Score Monitoring:** Regularly check your credit report for errors that could be impacting your score. Correcting errors can improve your chances of securing a better loan.
* **Secured Credit Cards:** Building credit through a secured credit card can improve your score over time, making future loan applications more favorable.

Consumers are advised to carefully weigh the costs associated with a loan before applying, particularly when dealing with a lower credit score. They should also be vigilant in choosing reputable lenders.

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