How to Get a Loan with a Low Credit Score in India | What to Do If You Can’t Pay Your Loan EMI in 2025
In today's financial landscape, having a good credit score is important. However, life doesn’t always go as planned. If you have a low credit score and still need a loan, or if you're struggling to pay your loan EMI in 2025, this guide will help you find practical solutions.
Securing a Loan with a Low Credit Score in India
In India, a credit score under 650 is typically seen as low. Although obtaining a loan with such a score can be difficult, it's still achievable. Here are some strategies that can help:
1. Apply for a Secured Loan
Secured loans like loan against property, gold loans, or fixed deposit-backed loans are easier to get approved even with a low credit score. The lender has collateral security, reducing their risk.
Tip: Gold loans are particularly popular in India because the process is simple and disbursal is quick.
2. Show Proof of Stable Income
If you can demonstrate a steady and sufficient income, lenders may overlook your poor credit history. Salaried employees with stable jobs and self-employed individuals with regular business income have better chances.
Tip: Attach your salary slips, bank statements, or IT returns while applying.
3. Consider a Co-Applicant or Guarantor
Adding a co-applicant or guarantor with a strong credit score can significantly increase your chances of loan approval. The lender’s risk is reduced since repayment responsibility is shared.
Tip: Ensure the co-applicant understands their financial obligations before signing.
4. Opt for NBFCs or Fintech Lenders
Many Non-Banking Financial Companies (NBFCs) and fintech lenders in India offer personal loans even with lower credit scores. However, the interest rates might be slightly higher compared to banks.
Tip: Make sure to evaluate and compare loan offers from several lenders to ensure you secure the most favourable terms.
5. Request a Smaller Loan Amount
If your credit score is low, asking for a small loan amount increases your approval chances. A smaller loan means lower risk for the lender.
Tip: Start with a small loan, repay it responsibly, and gradually build your credit profile.
6. Improve Your Credit Score Before Applying
If your loan need isn’t urgent, focus on improving your credit score first. Pay off existing debts, avoid late payments, and reduce your credit utilization ratio.
Tip: Review your credit report carefully for any inaccuracies and request corrections to improve your credit profile, if necessary.
Steps to Take If You're Unable to Pay Your Loan EMI in 2025
Sometimes, despite your best efforts, you may find it difficult to pay your monthly EMIs. If you are facing such a situation in 2025, here’s what you should do:
1. Inform Your Lender Immediately
The first and most important action is to promptly notify your lender once you know you won’t be able to pay an upcoming EMI. Many banks and NBFCs offer restructuring options for genuine cases.
Tip: Communication builds trust and may help you negotiate better terms.
2. Request for EMI Moratorium or Deferment
Lenders sometimes allow an EMI moratorium a temporary pause on payments especially during financial crises or job loss.
Tip: Understand the terms clearly. A moratorium usually means additional interest costs.
3. Opt for Loan Restructuring
In 2025, banks are offering more flexible loan restructuring schemes under RBI guidelines. This could involve lower EMIs, extended tenure, or reduced interest rates.
Tip: Restructured loans might impact your credit score but it’s better than defaulting.
4. Use Emergency Funds or Assets
If you have emergency savings, fixed deposits, mutual funds, or gold, consider liquidating them to keep up with EMI payments.
Tip: Protect your credit score by prioritizing EMI payments over other discretionary spending.
5. Switch to a Lower Interest Loan
You can explore options like balance transfer loans, where another lender offers you a lower interest rate. This can reduce your EMI burden.
Tip: Check processing fees and other hidden charges before transferring your loan.
6. Consolidate Your Debts
If you have multiple loans, debt consolidation can help. Taking a single loan to repay all existing debts can simplify payments and often reduce the overall EMI.
Tip: Debt consolidation works best when the new loan has a lower interest rate.
7. Take Financial Counseling
Many banks and NGOs offer financial counseling services. Professional counselors can help you create a plan to manage your debt more effectively.
Tip: Counseling is usually confidential and sometimes free.
Final Thoughts
In India, a low credit score or EMI payment issues in 2025 are not the end of the road. With the right strategy and responsible financial behavior, you can still access credit and manage your existing debts effectively. Always stay informed, communicate openly with your lender, and seek professional help when needed.
Building a strong credit history takes time, but each right decision today ensures better financial security tomorrow.
