Credit score: If you are looking for a loan but your credit score is in the range of low to mediocre, you do not need to fret! There are a number of tips and tricks that you can follow to grab a good personal loan deal even with a mediocre credit score.
Here, we list out some of these tips to get a loan with a mediocre credit score.
Securing loan on mediocre credit score
I. Banking relationship: First, you can reach out to the financial institution with which you share a regular banking relationship. You may have a greater possibility of securing a loan deal in comparison to an outside lender.
II. Fintech versus bank: The choice of lender is also important. Rather than approaching a bank with tougher loan approval criteria, one can seek a loan from a small fintech platform that– albeit at a higher rate of interest–offers loans on convenient terms and conditions.
III. Smaller amount: A small loan amount, if it meets your purpose, has a higher approval chance since it’s relatively less risky for the lender.
IV. Collateral: A secured loan (against assets such as a fixed deposit, gold, or insurance policy) is far easier to get than an unsecured loan with an average score.
V. Income proof: You can show income proof such as salary slip, multiple sources of income or additional assets to indicate your ability to repay, which is the key purpose of credit score.
VI. Secured credit card: Alongside, one can make an effort to improve credit score by applying for a secured credit card. A secured card is a card issued against the collateral of fixed deposit. This helps in building credit score in a short span of time.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.