Looking for loans for poor credit scores? - Here are 7 proven alternatives

Bad credit score can almost nullify your chances of  loan sanctions. Infact, around 79% loans are sanctioned to consumers with credit scores over 750. All loans - including home loans, car loans, gold loans, etc need thorough credit score checks for approvals. 

Credit score is a three-digit numeric summary of your credit information report that lenders consider for risk calculation before granting you a loan. It is indirectly proportional to loan interest rates. Low cibil score proves loan unworthiness of the borrower, therefore, getting a loan sanction is almost rare without a good cibil score.

Maintaining good credit history is always the best option. However, there are other possible options to get a loan with a bad credit score. Let's look at 7 proven ways to get a loan with poor credit. 

1. Joint loan/ Spouse loan - Adding extra borrowers like with a decent credit score can drastically increase the chances of loan approval.
   Your spouse credit score can act as a guarantee of loan refund. These loans are useful in home loans or other big amount loans with low interest rates. 
2. Co-operatives/ Rural Banks - Alternative lending institutions HFCs, Micro financing companies, co-operatives or rural banks usually skip credit score checks before granting a loan. Loan approvals are much easier for account holders in such banks. The interest rates are much higher than usual loans, though. 
3. Loan against collateral - Security or collateral provision can be a useful loan approval method for people with low cibil score or no credit history.
   Collaterals such as insurance policies, mutual funds, PPFs, fixed deposit, shares, credit card, etc could be used as security.
   There are no credit score checks for loans against security, in fact, these loans improve your credit history in return. 
4. Adding a guarantor  - The cases where the borrower has no credit history, job or constant income source which is much likely in cases of educational loans for students, any relative, friend or a family member with a good credit score can act as a repayment guarantor. 
5. Private lenders - Private lenders are preferred over certified banks and lenders due to lesser documentation and faster loan approvals. Smaller loans of lesser duration could be borrowed from private lenders for cases of bad credit score.
   Sometimes, interest rates and repayment tactics of these lenders are quite questionable.
   Friends or relatives could be consulted for loans for  negotiable interest rates and installment terms. 
6. Loan from corporate tie-ups - Many corporate companies and institutions have tie-up accounts in banks. You can avail small loans as an employee on the basis of the reputation of the company without credit score check. The HR of the company could be approached for a recommendation letter. 
7. Build a good credit score - Credit score improvement could take 1 to 2 years. Still it is the most viable option to avail loans and other benefits in future. Pay your bills, EMIs, dues timely to improve your credit score. Always try to maintain it above 750.

A 3-digit score should not hold you back from fulfilling your dreams. Look for your options carefully. There are tons of other ways available out there which does not require a good credit score. Faulty credit score would always put a question mark on your credit history and financial capabilities. Therefore, maintaining a decent credit score should not be an alternative.