Getting a loan with a bad credit score is challenging, but it’s not impossible. Many people in India struggle with low credit scores due to missed EMIs, credit card defaults, multiple loan applications, or unstable income. Yet financial emergencies don’t wait. Whether you need funds for medical bills, business needs, education, or personal expenses, there are legal and safe ways to get a loan even with a poor credit record.

In 2025, the lending landscape in India has changed drastically. New-age fintech companies, small finance banks, microfinance institutions, and NBFCs offer flexible loan options that don’t rely heavily on CIBIL scores. While traditional banks are strict, several legal alternatives exist—without falling into the trap of illegal loan apps.

This guide explains how to get a loan with a bad credit score, legally, safely, and without hidden risks.

What Is a Bad Credit Score?

In India, a credit score (CIBIL) ranges from 300 to 900.

• 750–900: Excellent
• 650–749: Good
• 550–649: Average
• 300–549: Bad / High risk

If your score is below 600, most big banks will reject your loan application. But that doesn’t mean you are out of options.

Why Banks Reject Loans With Low CIBIL Score

Banks are strict because CIBIL represents your repayment behavior. A low score tells the lender:

• You missed EMIs
• You delayed payments
• You used too much credit
• You applied for too many loans
• You defaulted on past loans

But fintech lenders use alternative credit evaluation, which makes it easier for bad-credit borrowers to get loans legally.

Legal Ways to Get a Loan With a Bad Credit Score in India (2025)

Here are the most reliable and safe options available today.

1. NBFC Personal Loans (Best for Bad Credit Borrowers)

NBFCs (Non-Banking Financial Companies) are far more flexible than traditional banks. They approve loans even with poor credit scores as long as you have stable income.

Top NBFCs for Low CIBIL Loans:

• Bajaj Finserv
• Tata Capital
• Hero FinCorp
• Shriram Finance
• HDB Financial Services
• Muthoot Finance
• IIFL Finance

Why NBFCs approve bad-credit loans:

• They check income stability more than CIBIL
• They accept higher-risk borrowers
• Their approval process is fast

Interest rates are slightly higher, but approval chances are excellent.

2. Instant Loan Apps (RBI-Approved Only)

Several loan apps legally operate under RBI-registered NBFCs. These apps give small loans even with low or no credit history.

Trusted Instant Loan Apps (Legal & RBI-backed):

• KreditBee
• MoneyTap
• Navi
• CASHe
• Fibe (EarlySalary)
• PaySense
• SmartCoin
• mPokket

These apps use alternative scoring:

• UPI transaction history
• Bank statement patterns
• Employment details
• Monthly income

This helps you get approved despite a low CIBIL score.

3. Secured Loans (No CIBIL Dependence)

If you take a loan against an asset, the bank relies more on the asset value than your credit score.

Types of secured loans:

• Gold loan
• Loan against Fixed Deposit
• Loan against LIC policy
• Loan against property (LAP)
• Loan against shares or NSC

Gold loans are the most popular option with instant approval and no CIBIL check.

4. Salary-Based Loans (Employer Tie-ups)

Some employers have tie-ups with banks or NBFCs to provide personal loans to their employees—no CIBIL check required.

Who gets these loans?

• IT employees
• Private company staff
• Government employees
• Corporate professionals

The EMI gets deducted from the salary, so lenders trust you more.

5. Co-applicant or Guarantor Loan

If your credit score is bad, adding a co-applicant with a good credit score increases approval chances.

Who can be a co-applicant?

• Parent
• Spouse
• Sibling
• Close relative

Lenders see the guarantor’s income and approve the loan even if your CIBIL score is low.

6. Credit Union & Cooperative Society Loans

Cooperative banks and credit societies offer small personal loans to members with flexible credit checks.

Benefits:

• Low documents
• Quick processing
• No heavy CIBIL requirement

These are safe and fully legal.

7. Loan Against Salary Account Bank

If you apply for a loan in the bank where you receive your salary, chances increase—even with a low CIBIL score.

Banks offering salary-based loans:

• HDFC
• ICICI
• Axis Bank
• Kotak
• SBI

They check salary flow and employment stability instead of credit score.

8. Peer-to-Peer (P2P) Lending Platforms (Legal & RBI-regulated)

RBI-approved P2P platforms connect borrowers with investors.

Legal P2P platforms:

• Faircent
• LenDenClub
• Liquiloans

These platforms approve borrowers with low scores if income is stable.

9. Improve Your CIBIL Score Quickly (Fast Hacks That Work)

Before applying for a big loan, you can quickly boost your score by:

✔ Clearing overdue EMIs
✔ Paying credit card bill in full
✔ Reducing credit usage below 30%
✔ Stopping multiple loan applications
✔ Using credit-builder loans
✔ Getting your CIBIL report corrected

A 30–60 point jump is possible within a few months.

Documents Needed for Bad-Credit Loans

Lenders will ask for:

• Aadhaar
• PAN
• Bank statement (3–6 months)
• Salary slip / income proof
• Address proof
• Employment details
• Co-applicant documents (if added)

Fintech apps require only Aadhaar + PAN + bank statement.

Tips to Get Approved Even With Bad Credit

Here’s how to maximize your chances:

✔ Apply to NBFCs, not big banks

✔ Show stable monthly income

✔ Add a co-applicant with better credit

✔ Choose small loan amount initially

✔ Avoid multiple applications

✔ Keep your bank statement clean

✔ Use salary account for the loan

Following these steps makes approval faster.

Loans to Avoid (Illegal + Unsafe)

❌ Apps demanding access to contacts/photos
❌ Lenders not registered with RBI
❌ Apps threatening recovery harassment
❌ Instant cash lenders offering 0% EMI (scams)

Always check if the lender/NBFC is RBI-approved.

FAQs

1. Can I get a loan with a credit score below 600?

Yes, NBFCs and legal loan apps offer loans even with scores below 600. Approval depends more on income, bank statement, and job stability. Secured loans like gold loans don’t rely on CIBIL at all. Avoid illegal lenders and stick to RBI-regulated options.

2. Is it legal to get loans from apps with no CIBIL check?

Yes, as long as the app is tied to an RBI-registered NBFC. Apps like KreditBee, Navi, CASHe, and Fibe are completely legal. They use alternative scoring methods instead of CIBIL. Avoid apps not listed on RBI-approved NBFC partner lists.

3. What is the easiest loan to get with bad credit?

Gold loans, small-ticket NBFC loans, and salary-based loans are the easiest. Instant loan apps also approve quickly if bank statements look stable. P2P platforms are another simple option. Unsecured bank loans are the hardest with bad credit.

4. Will taking a small loan improve my credit score?

Yes. Taking a small loan and repaying EMIs on time builds a positive repayment history. This helps improve your score over time. Even credit-builder loans from NBFCs can boost your score by 30–70 points in a few months.