# Personal Loan for Bad Credit: Options When CIBIL is Low

*Published: 2026-08-28 | Author: The Credit Compass Editorial Team | Category: CIBIL Score*

> A CIBIL score under 650 doesn't lock you out of a personal loan, but on a ₹3 lakh, 3-year loan it can turn roughly ₹48,600 in interest into roughly ₹1.58 lakh. Here are the four routes that actually work, and how to spot a predatory lender before you sign.

## The Short Answer: Four Routes Work, and Each Has a Real Cost

A low CIBIL score does not mean no lender will touch you — it means the pricing shifts hard against you, and the routes that stay open narrow to four: an NBFC or fintech lender that underwrites bank-statement and alternative data instead of leaning only on your bureau score, a secured loan against gold or a fixed deposit that sidesteps the credit check almost entirely, a co-applicant with a stronger score and income, or — for self-employed and gig income — a government-backed MUDRA loan not priced off your personal CIBIL at all.

The gap between these routes is real money. Major banks currently price a good-credit personal loan from roughly 9.99–10% p.a. (SBI Xpress Credit, Axis Bank, HDFC Bank and ICICI Bank rate cards, verified August 23, 2026), while lending platforms serving the bad-credit segment report NBFC pricing commonly running 20% to 36% p.a. or higher. On a ₹3 lakh loan over 3 years, that's the difference between roughly ₹48,600 in total interest at a 10% floor and roughly ₹1.58 lakh at 30% — nearly ₹1.10 lakh more on the same borrowed amount, purely because of where your score sits (worked table below). This guide walks through each route, what it realistically costs, and how to tell a legitimate bad-credit lender from an app built to trap you.

## What Actually Counts as "Bad Credit" in India

There's no single RBI-mandated cutoff for "bad credit" — CIBIL score bands are industry convention, not law. In practice, most banks reserve their best personal loan pricing for a score of 750 and above, weaken pricing (or decline outright) somewhere in the 650–749 range, and largely close their doors below 650. Lending platforms working this segment describe their own practical floors: Moneyview treats 650 as the point below which it stops approving through standard channels, while NBFC-focused platforms report non-bank lenders going down to roughly 600, occasionally lower, at a steep price (moneyview.in; getzype.com). Below approximately 600, mainstream unsecured options shrink fast and routes that don't depend on your own score — secured loans, a co-applicant — start to matter more.

What lenders are actually pricing for is repayment risk, measured partly through your score and partly through your FOIR (Fixed Obligation to Income Ratio) — most banks cap total EMI outflow at roughly 40–50% of monthly income. A low score signals a history of missed payments; a lender still willing to serve that segment has to charge enough across its book to cover that risk, which is why rates jump in bands rather than moving gradually with your score.

## Route 1: NBFCs and Fintech Lenders Built for the Bad-Credit Segment

A growing set of NBFCs and digital lenders underwrite specifically for applicants a bank would decline, reading bank-statement and alternative data rather than leaning on the CIBIL score alone. Moneyview's published low-CIBIL loan terms are a useful benchmark: it treats 650 as its practical floor, quotes partner-lender rates "starting at just 14% p.a." for loan amounts from ₹5,000 to ₹10 lakh, over tenures up to 60 months, to applicants aged 21–57 earning at least ₹25,000 a month with income credited directly to their bank account, plus a processing fee from 2% of the approved amount (moneyview.in). Treat "starting at" like a bank's advertised floor rate — the best case for the strongest applicant here, not a typical quote.

Below that 650 floor, the market thins but doesn't disappear. Lending platforms covering this segment describe a general NBFC personal loan range of roughly 10.99% to 36% p.a., with bad-credit applicants landing toward the top of that band — commonly cited as 20% to 36% p.a. or more — for loan amounts typically ₹10,000 to ₹5 lakh and tenures of 3 to 60 months (getzype.com, industry data, checked August 2026), with some lenders willing to consider scores as low as 600. Before applying anywhere in this segment, run the numbers on the [Rate Predictor](/rate-predictor) and the [Affordability Checker](/affordability-checker) — an EMI at 30%+ p.a. can look approvable on paper and still break your monthly budget.

## Route 2: Borrow Against Something You Already Own

If you own gold or hold a fixed deposit, a secured loan sidesteps the credit-score conversation almost entirely — the lender's risk is covered by collateral it can liquidate, not by your repayment history. This is consistently the cheapest and fastest route open to a bad-credit borrower.

Gold loans price well below any bad-credit personal loan: bank rate cards run from about 8.75% p.a. at SBI to a 9.30–17.86% band at HDFC Bank, with specialised NBFCs like Muthoot Finance (12.50–22.00%) and Manappuram Finance (9.90–21.67%) sitting further up (bank and NBFC rate cards via cleartax.in, verified August 2026). Most gold-loan lenders don't run a hard CIBIL check at all, since the loan is disbursed against appraised gold value, capped by RBI's tiered loan-to-value rules — broadly 75–85% depending on loan size — under the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025. A loan against FD can be cheaper still: SBI, for instance, lends up to 90% of an FD's value at the FD's own rate plus roughly 1%, close to 8% effective on a typical FD (paisabazaar.com, citing SBI's published terms). The trade-off is obvious — you need to already own the asset, and it's genuinely at risk if you default. Our [gold loan vs personal loan comparison](/blog/gold-loan-vs-personal-loan-india-2026) covers the full rate table and auction process.

## Route 3: Add a Co-Applicant With a Stronger Profile

Banks assess a joint application on the combined profile, often on whichever applicant's score and income are stronger — so a co-applicant with a clean CIBIL history and stable income can get you standard, non-bad-credit pricing even though your own score wouldn't qualify alone. This works well between spouses, or an adult child applying alongside a salaried parent. The catch is shared liability: both names sit on the loan, and a missed EMI damages both credit files — so this route only makes sense if you're genuinely confident in the repayment plan, not as a way to borrow more than either of you could comfortably service alone.

## Route 4: MUDRA, If Your Income Is Really Business Revenue

If your income is really business revenue rather than a salary — a repair shop, a small trading business, a delivery fleet of your own — the Pradhan Mantri Mudra Yojana (PMMY) is worth checking first. It's a collateral-free business loan in four tiers: Shishu (up to ₹50,000), Kishor (₹50,000–₹5 lakh), Tarun (₹5 lakh–₹10 lakh) and Tarun Plus (₹10 lakh–₹20 lakh, for repeat borrowers), extended through banks, RRBs, small finance banks and NBFCs (pib.gov.in). Routed through PSU and private banks under a government scheme, pricing sits closer to secured business-loan rates than the 20–36% unsecured bad-credit band — but you'll need to show the business is real (GST or Udyam registration, a current account) rather than lean on your CIBIL score. Our guides for [self-employed borrowers](/blog/personal-loan-for-self-employed-how-to-get-approved-in-2026) and [gig platform workers](/blog/personal-loan-gig-workers-india-zomato-swiggy-uber-2026) cover the document checklist.

## The Real Numbers: What Bad-Credit Pricing Actually Costs You

| Segment | Representative rate (p.a.) | Source |
|---|---|---|
| Good-credit bank personal loan (750+ CIBIL) | ~9.99%–10% floor | SBI, Axis, HDFC, ICICI rate cards, verified Aug 23, 2026 |
| NBFC/fintech, CIBIL ~650 (Moneyview segment) | From 14% | moneyview.in |
| NBFC bad-credit segment, CIBIL ~600–650 | 20%–36%+ | getzype.com, industry data |
| Gold loan (any CIBIL, collateral-based) | ~8.75%–17.86% (bank), up to ~22% (NBFC) | bank/NBFC rate cards via cleartax.in |
| Loan against FD | ~FD rate + 1% (≈8% effective) | paisabazaar.com, citing SBI |

Run the same ₹3 lakh, 3-year loan through a 10% floor and a 30% bad-credit rate (the mid-point of the 20–36% band above), on a standard reducing-balance EMI basis:

| | At 10% p.a. | At 30% p.a. |
|---|---|---|
| Loan amount | ₹3,00,000 | ₹3,00,000 |
| Tenure | 36 months | 36 months |
| Monthly EMI | ≈ ₹9,682 | ≈ ₹12,734 |
| Total interest paid | ≈ ₹48,600 | ≈ ₹1,58,400 |
| Total amount repaid | ≈ ₹3,48,600 | ≈ ₹4,58,400 |

*Illustrative rates for comparison, not a quote — your actual rate depends on the lender, your score, income and any collateral offered. The roughly ₹1.10 lakh gap is the price of borrowing unsecured with a damaged score rather than through a secured or co-applicant route — checking every alternative above before accepting a bad-credit NBFC offer is worth the extra day it takes.

## RBI's Protections — and the Red Flags That Mean You're Looking at a Predatory Lender

Applicants with a low CIBIL score are exactly who predatory lending apps target, because "no credit check" and "guaranteed approval" are the two phrases that work best on someone a bank has already turned down. Under RBI's Digital Lending Directions, 2025 (issued May 8, 2025), every RBI-regulated digital lender must give you a Key Fact Statement (KFS) before disbursement stating the full interest rate, every fee and the total amount payable; must publish its grievance officer's contact details and a link to RBI's complaint system; and must offer a cooling-off period after disbursement during which you can exit by repaying only the principal and proportionate interest, without penalty.

Treat any of the following as a hard stop: the app won't name the actual bank or NBFC funding the loan; it asks for an upfront "processing" or "insurance" payment before disbursal; it skips the KFS or won't show you the all-in rate before you accept; or it offers no cooling-off window. None of these are things a legitimate bad-credit lender needs to hide. Check our [Red Flags guide](/red-flags) before handing over KYC documents to any app promising instant, no-questions-asked approval, and see our [breakdown of your 2026 borrower rights](/blog/rbi-loan-rules-borrower-rights-2026) for the full list of protections that apply regardless of your score.

## Rebuild Your Score While You Borrow — Don't Just Borrow Around It

Every route above works around a low score — none of them fixes it, and the interest premium you're paying now gets priced against that same score again at your next renewal. If you're not borrowing against an emergency this week, check whether you can raise your score first: a secured credit card against an FD, consistent on-time payments, and lower credit utilisation all move the number, typically over months rather than years. Our [guide to improving your CIBIL score fast](/blog/how-to-improve-cibil-score-fast-india-2026) covers the steps, and the [minimum CIBIL score by bank guide](/blog/minimum-cibil-score-personal-loan-guide-2026) shows where each lender's threshold sits, so you know how close you are to standard pricing.

## When These Routes Don't Apply

If you have no credit history at all rather than a damaged one — a thin file, not a bad score — you're in a different situation than the one covered here; lenders can't price a risk they have no track record to measure, and the practical fixes (a secured credit card, becoming an authorised user, a small credit-builder loan) differ from what helps an existing low score. If your score is severely low and you have neither collateral nor a co-applicant, most legitimate lenders will decline outright rather than price you in; at that point, addressing what's actually driving the score (unpaid dues, a settled account, a genuine report error) matters more than searching for a lender willing to ignore it. And if you're already juggling multiple high-cost loans rather than taking a first one, this isn't the guide you need — read [how to get out of a personal loan debt trap](/blog/personal-loan-debt-trap-india-2026) instead.

## Credit Compass Verdict

**If you own gold or a fixed deposit, use it before you look at any bad-credit NBFC.** The rate gap is enormous — roughly 8.75% to high-teens on a gold loan versus 20%+ for unsecured bad-credit lending — and most gold lenders don't check CIBIL at all. Compare options on the [Rate Predictor](/rate-predictor) before assuming you need an unsecured route.

**Treat any "starting from" rate as marketing, not a quote.** Moneyview's 14% floor and the 20–36% NBFC bad-credit band are best-case-to-worst-case ranges, not a guaranteed offer. Run the actual EMI on the [Personal Loan EMI Calculator](/calculators/personal-loan-emi-calculator) and check the budget impact on the [Affordability Checker](/affordability-checker) before signing anything.

**A co-applicant with a clean score is often the cheapest fix you're not considering.** It can get you standard bank pricing instead of the bad-credit segment — but only if you're confident in the repayment plan, since a missed EMI damages both credit files.

**Check every digital lender against the KFS and cooling-off requirements before applying.** This segment is where predatory apps concentrate hardest. Review the [Red Flags guide](/red-flags) first, and if you're rebuilding rather than borrowing urgently, start with [improving your CIBIL score](/blog/how-to-improve-cibil-score-fast-india-2026) instead.

## Three FAQs

**Can I get a personal loan in India with a CIBIL score below 650?**

Yes, through a narrower set of routes. NBFCs and fintech lenders that underwrite bank-statement and alternative data — rather than relying on your bureau score alone — will consider applicants down to roughly 600, sometimes lower, though pricing runs materially higher, commonly 20% to 36% p.a. or more, against a bank floor near 10% for good-credit applicants. A gold loan, a loan against FD, or a co-applicant with a stronger profile can get you standard pricing regardless of your own score.

**What interest rate will I pay with a low CIBIL score?**

It depends on the route. A secured loan against gold or an FD can still land near 8.75%–17.86% p.a. because the collateral, not your score, is what's priced. An unsecured NBFC or fintech loan for a bad-credit applicant commonly runs 20% to 36% p.a. or higher (industry data, verified August 2026), against roughly 9.99–10% p.a. at major banks for a strong-credit applicant. Always get the actual Key Fact Statement before assuming an advertised "starting from" rate is yours.

**Will taking a bad-credit loan improve my CIBIL score?**

Only if you repay it on time, every time — a new loan doesn't repair a damaged score by itself, and a missed EMI on a bad-credit loan can push it lower instead. If your goal is a better score rather than urgent cash, it's usually faster and cheaper to work on the score directly — on-time payments, lower utilisation, correcting report errors — before taking a high-interest bad-credit loan at all.

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