Personal Loan With 500 Credit Score – All You Need to Know
4 September
Synopsis:
Lenders check your credit score when you apply for Personal Loans.
A credit score of 500 can cause obstacles in your path of obtaining Personal Loans.
It is best to fix your credit score, ensuring it surpasses 650 points, before applying for the loan.
Personal Loans provide you easy access to cash, especially when you need money during emergencies. Today, lenders allow you to apply online, and if you meet their eligibility requirements, they may grant the loan instantly. One of the vital eligibility metrics is your credit score. While high credit scores result in quick loan sanction, a low score can cause obstacles in the loan procuring journey. This article explains everything you need to know about obtaining Personal Loan for 500 credit score.
Breaking Down Credit Scores
A credit score is a 3 digit score, ranging from 300 to 850/900 points that gives your potential lenders a sneak peek into your credit management style. It tells them how many loans you have obtained or Credit Card and other debts you have accumulated, and whether or not you have been paying off your debts on time.
Your good credit handling behaviour translates to credit scores exceeding 650 points. On the other hand, if you have been struggling to pay of your debt, your score may be lower than 650 points. A low score makes lenders think that you are a risky borrower, which impacts your chances of procuring a loan. Conversely, good credit management translates to a high credit score, making you creditworthy.
What are your chances of Obtaining Personal Loan for Credit Score of 500?
Truth be told, your chances of obtaining a Personal Loan on 500 credit score are rather slim. To your potential lender, you credit score of 500 points indicates that you are struggling to handle your debts properly. It implies that if you are already struggling with your existing debts, you may be unable to take on a new loan and repay it on time. As such, lenders may be reluctant to lend you money.
Sometimes, some lenders may be willing to offer you a loan, but this comes with a catch. For instance, a lender who is willing to offer the Personal Loan with 500 credit score, may charge an exorbitant interest rate and also ask for collateral. Plus, you may have to compromise and obtain the loan from small-time or private lenders, who may levy unreasonable demands and seize your collateral if you fail to repay even a single EMI on time.
How Can you Improve your Credit Score?
You never know when you may need to apply for a loan. As such, you must ensure your credit score is always above 650 points. If your score is currently low, you can follow these practices to enhance it:
Ensure you repay your outstanding Credit Card dues in full, and on time, every time. Avoid making partial or minimum payments.
Do not over utilise your credit limit. Keep your utilisation limit up to 30% to show lenders that you are not overly reliant on your Credit Card.
If you have any existing loans or debts, consider becoming debt free and repaying them before you take on a new loan.
If you have been repaying your loans on time, but your score is still low, get your credit report analysed and have the errors fixed.
Once you fix your credit score, you can enjoy easy loan approvals. You can also negotiate for better interest rates and loan terms and get loans of higher amounts.
Fulfil Your Needs with HDFC Bank Xpress Personal Loans
Xpress Loans can come to your rescue during financial emergencies, giving you access to the funds you need easily. At HDFC Bank, we offer unsecured, instant and paperless Xpress Personal Loans of up to ₹40 lakhs, repayable over flexible tenures of 5 years. We also offer attractive interest rates, seamless application processes and swift disbursal of funds. Apply today.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Personal Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank’s requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
