How to Get a Home Loan With Low Credit Scores

Applying for a home loan is a big financial step. And one of the most important factors that will reduce or increase your loan burden is your credit score. Lenders look for a decent credit history to process your home loan application. But that doesn’t mean you won’t get a home loan with a lower score.

You can do certain things to ensure a hassle-free home loan process even with a low credit rating. Here is how to get a home loan with a low credit score.

Try Paying Off Debts

If you have any debts that are due to be cleared soon, get rid of them before you apply for a home loan. Paying your credit card bills on time can also help increase your credit score.

Hold off on your home loan application until you get your existing liabilities cleared in full. This will increase your credit rating and reduce your financial burden once you get the home loan.

Co-borrow with Spouse

One of the most common ways to overcome a bad credit rating is to co-borrow with a spouse or another earning member in the family.

Make sure your joint applicant has a good credit rating, as this will boost your chances of getting a home loan. A joint application will also help you split the repayment burden.

If you co-borrow with a female applicant, you can save on interest since female home buyers get the lowest home loan interest rate in India.

Good Monthly Income

If you have a decent monthly income or salary, it can compensate for your bad rating. Several factors can contribute to a low credit score, but lenders will consider your salary against a low credit score.

If you have a decent salary, lenders can be reassured of your repayment, especially if your low credit rating is not due to previous defaults.

Consider Alternate Lenders to Banks

Banks are not the only place to get a home loan. You can avail of home loans with financial institutions, NBFCs, or housing finance companies that deal in home loans.

If you’re eligible for a low-income lending program, you can apply for such a scheme instead of getting a loan from a bank.

Other Factors to Consider When Applying for a Home Loan with a Low Credit Score

When contemplating how to get a home loan, know that lenders consider several other things in your loan application, not just the credit score. So even if you have a low credit score, you can focus on these other things to leverage your loan application.

Working in a large MNC or a government institution represents income stability, thus reducing your risk of repayment default. Here are some other factors to consider:

  • If you have a higher salary than the minimum requirement for the loan application, it improves your chances of getting the home loan.
  • Employment stability, such as ten years or more, is another favourable factor in your loan process. If you’ve been employed continuously by the same employer or different employers, it helps lenders see that you can maintain a constant source of income.
  • If you’re in an in-demand or high-paying profession, like defence officers, doctors, or IAS Officers, you can get a home loan even with a poor credit history.
  • Make credit repayments on time. Even if you have a low score, timely payment is a positive mark on your credit report. Try to build your credit report by avoiding any last payments and not adding on any additional debts.
  • Don’t apply for any fresh credit. Any existing loan or debt is considered a liability and will be considered by lenders when processing your loan application. Home loan repayments are usually hefty, so make sure you don’t increase your financial risk by adding any more debts unless necessary.


While you might consider accepting any home loan offer that comes your way just because of a bad credit rating, it might increase your financial burden later. When choosing your loan offer, look for one that has the lowest home loan interest rate in India compared to all your other offers.

It’s advisable to wait for a good loan offer to come along rather than settle for what you get and regret it later.

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