How to Get a Personal Loan with a 600 Credit Score: Tips and Eligibility

Most lending institutions desire a higher score (700 or more) but obtaining a loan with a score of 600 is still possible. The deal, however, may be accompanied by higher interest rates and stricter conditions. If you don’t know how to handle this situation, you have landed right on the spot. In this blog, we will find out how you can increase the chances of getting a personal loan with a 600 credit score, the things that affect your loan eligibility, and some tips on how to boost your credit score.

What Is a CIBIL Score and How Does It Affect Your Loan Eligibility?

A CIBIL score is a 3-digit figure that can be in the range of 300 to 900 and it shows your creditworthiness. Simply put, a good CIBIL score indicates that you are a reliable borrower; however, if your CIBIL score is low, lenders will perceive you as a risky borrower. The majority of lenders prefer a score of 700 or more as it indicates that the customer is financially responsible.

Credit Score Range:

• Excellent: 750-900
• Good: 700-749
• Fair: 600-699
• Poor: Below 600

Such a score that low (600) is going to put you in the "fair" category and it may become an obstacle if you want to take a personal loan. You can be in a situation where you are asked to pay a higher interest rate, get through a very restrictive approval.

How to Get a Personal Loan with a CIBIL Score of 600?

While looking for a loan on CIBIL score of 600, you must invest some extra effort to showcase your repayment capacity. Before sanctioning your loan application, lending institutions want to ensure they will get their money back on time with interest. So, you must convince them by showing a decent income, low financial obligations, a stable job, enough work experience, and sound financial well-being. To apply for a 600 CIBIL score loan, you must provide additional documents and fulfil other formalities to get approval.

Even with a 600 CIBIL score, you can demonstrate a high repayment capacity by showing multiple income sources, maintaining a low DTI ratio, using credit cards sparingly, building work experience at the same place of employment, and avoiding numerous loan applications simultaneously. You may also get a loan by requesting the lender to consider your case in NA (Not Applicable) or NH (No History).

CIBIL Score for Personal Loans

CIBIL score is a 3-digit number ranging from 300 to 900. A decent credit score indicates a consistent repayment history, diverse credit portfolio, sufficient credit age, low debt-to-income and credit utilisation ratio, and responsible credit behaviour. The more responsibly you handle credit, the higher the credit score you can accumulate. 

Lending institutions expect a score above 700 to approve loan applications. If your score exceeds this threshold, you can quickly grab a loan with the lowest interest rates. However, if you expect a Personal Loan with a 600 credit score, you can still get one from Hero FinCorp, but at a slightly higher interest rate and stricter terms and conditions. That is why maintaining a decent CIBIL score is crucial for your financial health and loan eligibility.

Also Read: What Credit Score do I need for Personal Loan

What are the Factors for a Low Credit Score?

Your credit score is a numerical summary of your overall credit behaviour. When you apply for a personal loan with a 600 credit score, lending institutions determine your credibility based on this 3-digit number. Wondering why your CIBIL score is low? Below are a few factors for a low credit score:

• Irregular Repayment History: Making all your EMI and credit card bill payments is vital, failing which might result in penalties, late payment charges, increased interest costs, and red marks on your credit report.
• Missed Bill Payments: Amidst the hectic everyday routine, it is easy to forget your EMI and credit card bill payments each month on the due date. Failing to pay them every time in full may adversely impact your CIBIL score.
• New Credit History: Building credit history takes time. If you have never used credit or recently started building it, getting the best loan offer will be challenging while looking for a 600 credit score loan. 
• Same Debt Types in the Portfolio: You must diversify your credit portfolio with different types of debts, including secured and unsecured loans. Building credit with the same debt type indicates poor financial management, leading to a lower credit score.
• Multiple Credit Enquiries: Be careful while making your loan enquiries. The loan company pulls out your credit report with each loan application, known as a hard enquiry, and each hard enquiry reduces the credit score by a few points.

How to Improve Your CIBIL Score Above 600?

Obtaining a 600 CIBIL score loan is challenging and attracts a higher interest rate. So the best strategy is to improve the score in different ways. Here are some tips to improve your CIBIL score above 600:

• Make timely payments of your loan EMIs and credit card dues.
• Use less than 30% of your available credit limit to keep the credit utilisation ratio low.
• Maintain an adequate mix of different loan types.
• Review the CIBIL report and check your credit score at least twice a year.
• Resolve errors, comments, or issues in your credit report as quickly as possible.
• Keep track of your credit accounts and pay them off immediately.
• Retain old credit card accounts to increase the credit age.