Urgent Loan from NBFCs With Bad Credit In India
Credit score is an insight into your financial discipline. The personal credit score ranges from 300 to 900 where 300 is the lowest and considered most risky and 900 as the safest. The definition of bad credit score changes as per the risk appetite of the lenders, however, a score less than 600 is generally considered as a bad credit score. As the credit score reduces, the interest rate charged to the borrower increases. Moreover, getting a business loan also becomes more and more difficult.
In such scenarios, traditional lending institutes such as banks may not be the right choice for your credit needs. NBFCs like red fort capital cater to these segments by leveraging multiple alternate information sources. This makes them a viable option for business loans with bad credit in India.
What is a bad credit score?
Score Range | Status | What it means? |
800 & Above | Excellent Score | A very low risk of defaulting on credit obligations |
740-799 | Very Good Score | Low risk of default and suggests responsible credit behaviour |
670-739 | Good Score | May qualify for loan but with slightly higher interest rate, signify responsible credit management |
580-669 | Fair Score | Some credit issues but may still qualify for certain loans |
300-579 | Poor Score | Qualifying for loan is a challenge with very high interest rates, low credit limits and stringent terms |
Ways to improve your chances of getting a loan?
While there are difficulties, as a borrower you can introduce following points to improve your chances of getting a business loan from NBFC:
- Collateral: Offer a valuable asset like land, building, machinery or equipment, gold, fixed deposits, etc. as collateral. Opting for a secured loan enhances the chances of getting loan as the lender will have collateral in case of default. However, the ratio of loan to value of collateral is kept low.
- Personal guarantor or co-application: Having a co-applicant with good credit history who takes the joint responsibility towards loan can enhance your likelihood of getting the loan sanctioned. Personal guarantee from a person with better credit also improves the chances to quickly secure a loan who acts as backup for lender in case you are unable to repay the loan.
- Clarity on previous errors: Businesses go through various cycles and there are good chances, your credit score was impacted in a down cycle. Learning from previous mistakes is a great way to not repeat the same in future. Creating a solid roadmap and a detailed crisis management plan can instil more confidence in the lenders.
- Loan contours: Plan your financial needs and negotiate for terms that your business can sustain. This can be reducing the loan amount, increasing the tenure, or reducing the rate. A favourable relation with your financer enables you to have a top-up facility from the same lender or in the long run improve your credit score and enable you to explore other financing options.
- Improve credit score: Paying EMIs and credit card bills on time, reducing unnecessary credit enquiries, keeping credit utilisation ratio low, etc gradually improves the credit score. This can be understood in more detail in our following blog:
“7 Proven Strategies to improve your CIBIL Score”
Having a bad credit score does not necessarily mean that you cannot get a loan. By keeping in mind the above mentioned factors, loan can be taken. However, it is advised to keep good and consistent credit management which will help in improving the credit score and have better financial future.
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About Red Fort Capital
Red Fort Capital is dedicated to empowering Indian MSMEs (Micro, Small, and Medium Enterprises) on their path to business growth through customized business loans. We understand that securing a business loan in India can pose significant challenges, particularly when factors like a less-than-ideal credit score, a relatively short business history, unclear financial records, or variable cash flow come into play.
As a respected Non-Banking Financial Company (NBFC), we take pride in offering a diverse range of secured business loans, spanning from 1 to 10 Crores. What sets us apart is our remarkable ability to disburse funds fast, in just 7 days. Our financial solutions are meticulously designed to cater to a spectrum of needs, including working capital requirements, equipment and machinery purchases, invoice/bill discounting, and last-mile financing, among others.
