The challenge of securing loans with a low CIBIL score is a reality for many Indians. This comprehensive guide explores loan application options for those with less-than-ideal credit scores, explains what affects your score, and provides actionable strategies to improve your creditworthiness. Whether you’re dealing with past credit issues or building credit for the first time, this article will help you navigate the digital lending landscape in India.

Top Loan Apps for Low CIBIL Scores

Below is an exhaustive analysis of leading loan apps in India that cater to borrowers with low CIBIL scores, including their eligibility criteria, loan terms, and unique features.

1. NoBroker Instacash

• Loan Range: ₹10,000 – ₹10,00,000
• Interest Rate: 12.99% – 24% annually
• Processing Fee: 1–2% of the loan amount
• Eligibility: Salaried or self-employed individuals
• Disbursal Time: 24 hours
• Pros: No guarantor required, streamlined digital process
• Cons: Limited availability to specific cities 1. 

NoBroker Instacash prioritises income stability over credit scores, making it ideal for borrowers with irregular credit histories. The app’s competitive interest rates start at 12.99%, though geographic restrictions may limit accessibility 1.

2. CASHe

• Loan Range: ₹7,000 – ₹3,00,000
• Interest Rate: 15% – 30% annually
• Processing Fee: ₹500 – ₹1,500
• Eligibility: Salaried professionals
• Disbursal Time: Minutes
• Pros: Instant approval, no collateral
• Cons: High interest rates for long-term loans 1.

CASHe targets salaried millennials with short-term credit needs. While disbursement occurs within minutes, its annual interest rates can exceed 30%, making it costlier for larger amounts 1.

3. KreditBee

• Loan Range: ₹1,000 – ₹2,00,000
• Interest Rate: 18% – 36% annually
• Processing Fee: 2.5% of the loan amount
• Eligibility: Salaried and self-employed individuals
• Disbursal Time: 15 minutes
• Pros: Ultra-fast processing, small-ticket loans
• Cons: High processing fees 1.

KreditBee specialises in urgent loans as low as ₹1,000, ideal for immediate expenses. However, its steep processing fees and interest rates make it less suitable for long-term borrowing 1.

4. PaySense

• Loan Range: ₹3,000 – ₹5,00,000
• Interest Rate: 13% – 24% annually
• Processing Fee: 2% of the loan amount
• Eligibility: Salaried or self-employed
• Disbursal Time: 24 hours
• Pros: Flexible repayment via credit line
• Cons: Stricter income requirements 1.

PaySense offers a revolving credit line, allowing borrowers to withdraw funds as needed. Interest applies only to the utilised amount, but eligibility criteria favour stable income earners 1.

5. NIRA

• Loan Range: ₹5,000 – ₹1,00,000
• Interest Rate: 20% – 36% annually
• Processing Fee: 2.5% of the loan amount
• Eligibility: Salaried professionals
• Disbursal Time: 24 hours
• Pros: Tailored for middle-class borrowers
• Cons: High processing fees 1.

NIRA focuses on small-ticket loans for urgent needs like medical bills. Its interest rates are among the highest, but disbursement speeds compensate for time-sensitive requirements 1.

6. HomeCredit

• Loan Range: ₹10,000 – ₹2,00,000
• Interest Rate: 24% – 36% annually
• Processing Fee: ₹500 – ₹2,000
• Eligibility: Salaried or self-employed
• Disbursal Time: 48 hours
• Pros: Low documentation, appliance financing
• Cons: High interest rates 1.

HomeCredit provides consumer loans for electronics and appliances, accepting borrowers with poor credit. However, annual rates up to 36% make it a costly option1.

7. Fullerton India

• Loan Range: ₹25,000 – ₹10,00,000
• Interest Rate: 12% – 24% annually
• Processing Fee: ₹2,000 onwards
• Eligibility: Salaried or self-employed
• Disbursal Time: 48 hours
• Pros: Large loan amounts, transparency
• Cons: Longer processing times 1.

Fullerton India caters to borrowers needing substantial amounts, with rates starting at 12%. Its structured eligibility criteria favour those with steady income streams1.

8. Jupiter

• Loan Range: Up to ₹5,00,000
• Interest Rate: 1.33% monthly
• Eligibility: Salaried professionals
• Disbursal Time: Instant
• Pros: User-friendly interface, no hidden fees
• Cons: Limited to pre-approved users 2.

Jupiter’s competitive monthly interest rate of 1.33% makes it ideal for short-term borrowing. However, access is restricted to pre-qualified customers 2.

9. EarlySalary (Fibe)

• Loan Range: Up to ₹2,00,000
• Interest Rate: 1.33% monthly
• Eligibility: Salaried individuals
• Disbursal Time: Minutes
• Pros: Salary-linked repayment flexibility
• Cons: Limited to salaried users 2.

EarlySalary offers loans tied to salary cycles, allowing automatic EMI deductions. Its focus on salaried professionals excludes self-employed borrowers 2.

10. mPokket

• Loan Range: Up to ₹25,000
• Interest Rate: 2% monthly
• Eligibility: Students and young professionals
• Disbursal Time: Instant
• Pros: No credit history required
• Cons: Small loan amounts 2.

mPokket serves students and entry-level professionals with microloans up to ₹25,000. While accessible, its loan ceiling limits utility for larger expenses 2.

Reasons for a Low CIBIL Score

Understanding what causes a low score is the first step toward improvement. Here are the primary factors that can negatively impact your CIBIL score:

1. Delayed or Missed Payments

Your payment history significantly affects your CIBIL score. Repeatedly delayed or missed EMI or credit card payments will cause your score to decrease substantially 7. When your credit report displays “Days Past Due” (DPD) with numbers, it indicates payment defaults that lead to a sharp drop in your credit score 7. Even small unpaid amounts that remain outstanding for extended periods can drastically lower your CIBIL score 7.

2. Multiple Credit Applications in a Short Period

Submitting numerous applications for loans and credit cards within a short timeframe increases the number of hard inquiries on your credit report 7. Each inquiry gets recorded and depicts you as credit-hungry, potentially at higher risk of default. As a result, your CIBIL score begins to fall 7. Additionally, outright rejections of your loan or credit card applications negatively impact your score 7.

3. High Credit Utilisation

Consistently maxing out your credit cards or using a high percentage of your available credit indicates financial stress and may suggest you’re overleveraged. This behaviour typically results in a lower credit score.

4. Lack of Credit History

Having no credit history results in a CIBIL score of -1, while a credit history less than 6 months old gives you a rating of 0 6. Without established credit, lenders cannot assess your repayment behaviour, making them hesitant to extend loans.

5. Errors in Credit Report

Inaccuracies in your credit report, such as incorrectly reported payments or fraudulent accounts opened in your name, can unfairly lower your score. Regular monitoring helps identify and rectify such issues.

Key Considerations When Choosing a Loan App

Interest Rate Variability

Apps like KreditBee and NIRA charge up to 36% annually, while Fullerton India and NoBroker offer rates as low as 12%. Always compare effective annual rates, including processing fees 1 2.

Disbursement Speed

For emergencies, CASHe and mPokket disburse funds instantly, whereas Fullerton India and HomeCredit may take 48 hours 1 2.

Eligibility Flexibility

Jupiter and EarlySalary restrict eligibility to salaried users, while NoBroker and PaySense accommodate self-employed individuals 1 2.

Hidden Costs

Processing fees range from 1% (NoBroker) to 2.5% (KreditBee). Apps like Jupiter avoid hidden charges but have stricter eligibility 1 2.

Regulatory Compliance and Safety

All listed apps partner with RBI-registered NBFCs, ensuring adherence to digital lending guidelines. For example, MoneyTap and CASHe comply with data localisation norms and transparent APR disclosures 1 3.

Improving CIBIL Score via Loan Apps

Timely repayment through these apps reports to credit bureaus, gradually improving scores. For instance, a ₹10,000 loan from NoBroker repaid over six months can boost a 550 score to 650 within a year 1.

By selecting apps aligned with your financial profile and repayment capacity, you can address immediate needs while rebuilding credit. Always prioritise apps with RBI partnerships and transparent terms to avoid predatory practices 1 2 3.

Key Characteristics of Low-CIBIL Score Loan Apps

Most loan apps catering to borrowers with low credit scores share certain characteristics:

1. Higher interest rates: To compensate for increased risk, interest rates are typically higher than traditional loans
2. Smaller loan amounts: Initial loan limits are usually conservative until you establish payment reliability
3. Shorter repayment periods: Loans often have terms of weeks or a few months rather than years
4. Alternative evaluation methods: Analysis of bank statements, income stability, and other financial behaviours
5. Quick processing: Many offer rapid approval and disbursement, sometimes within minutes or hours

RBI Guidelines for Digital Lending

The Reserve Bank of India (RBI) released guidelines for digital lending on August 10, 2022, to provide a regulatory framework for FinTech and Digital Lending Applications 8. These guidelines aim to address concerns related to “unbridled engagement of third parties, mis-selling, breach of data privacy, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices” 8.

Consumer Protection Measures

The RBI has implemented several measures to protect borrowers:

1. Direct disbursements and repayments: Loan disbursals and repayments must be executed directly between the borrowers and bank accounts of Regulated Entities (REs). These transactions cannot be routed through third-party pass-through accounts 8.
2. Transparent interest rate disclosure: Annual Percentage Rate (APR) must be calculated using algorithms based on all-inclusive costs and margins 8.
3. Key Fact Statement: All borrowers must receive a standardised KFS before executing a loan contract. This statement includes APR details, terms and conditions of recovery mechanisms, and information about grievance redressal officers 8.
4. Automatic documentation: Digitally signed documents supporting important transactions must flow automatically from the lender to the borrower via registered email or SMS upon executing the loan contract 8.
5. Strengthened grievance redressal: REs and their Lending Service Providers (LSPs) must appoint nodal grievance redressal officers to handle complaints related to FinTech/digital lending. If a complaint isn’t resolved within 30 days, borrowers can file a complaint through the RBI’s Complaint Management System 8.

Technology and Data Requirements

The RBI has also implemented strict rules regarding data collection and storage:

1. Need-based data collection: Digital Lending Apps (DLAs) should collect data only on a need basis and with prior consent 8.
2. Limited device access: DLAs must not access files, media, contact lists, call logs, etc., stored on phones. One-time access to camera, microphone, location, or other facilities is permitted only with consent for KYC requirements 8.
3. Data localisation: All collected data must be stored in India 8.
4. Biometric data restrictions: Biometric data related to customer due diligence cannot be stored in DLA systems 8.

Strategies to Improve Your CIBIL Score

If you’re facing challenges due to a low CIBIL score, implementing these strategies can help improve your creditworthiness over time:

Immediate Actions

1. Check your credit report for errors: Obtain your credit report and verify that all information is accurate. Dispute any errors with the credit bureau.
2. Clear outstanding dues: Prioritise paying off any overdue accounts to prevent further damage to your score.
3. Avoid multiple loan applications: Refrain from applying for multiple loans or credit cards in a short period to prevent hard inquiries that lower your score 7.
4. Set up payment reminders: Ensure timely payment of all EMIs and credit card bills by setting up automatic payments or reminders.

Medium-Term Strategies 449320

1. Reduce credit utilisation ratio: Try to use less than 30% of your available credit limit on credit cards.
2. Maintain a healthy credit mix: Having different types of credit (such as credit cards and loans) can positively impact your score when managed responsibly.
3. Retain old credit accounts: Longer credit histories generally result in better scores, so avoid closing old accounts in good standing.
4. Request credit limit increases: Higher limits with the same spending patterns lower your credit utilisation ratio.

Long-Term Habits

1. Consistent, timely payments: Regular, on-time payments are the most significant factor in improving your score over time.
2. Regular monitoring: Check your credit report periodically to track progress and identify areas for improvement.
3. Responsible credit use: Use credit regularly but responsibly to establish a positive payment history.

Precautions When Using Loan Apps

While loan apps can provide quick financial relief, users should exercise caution:

Red Flags to Watch For

1. Extremely high interest rates: Compare rates across multiple platforms; excessively high rates may indicate predatory lending.
2. Hidden fees: Carefully read the Key Fact Statement (KFS) to understand all charges involved 8.
3. Aggressive recovery practices: Legitimate lenders follow ethical recovery guidelines as mandated by the RBI.
4. Excessive data access requests: Be wary of apps requesting permissions unrelated to lending services, such as access to contacts or photo galleries8.
5. Unregistered entities: Verify if the lending entity is regulated by the RBI or associated with an RBI-regulated institution.

Best Practices

1. Read terms carefully: Understand repayment terms, interest rates, and penalties before accepting a loan.
2. Check RBI registration: Confirm the app is operated by or connected to an RBI-registered entity.
3. Use official sources: Download apps only from official app stores and verify their authenticity.
4. Protect personal information: Share only essential information required for loan processing.
5. Maintain records: Keep documentation of all transactions and communications with the lender.

Conclusion

Navigating the financial landscape with a low CIBIL score presents challenges, but understanding your options and taking proactive steps can improve your situation. Digital lending apps have made borrowing more accessible, even for those with imperfect credit histories, though these options often come with higher costs.

The RBI’s regulatory framework for digital lending offers important consumer protections, but borrowers must remain vigilant and choose reputable lenders. Most importantly, view any loan as an opportunity to demonstrate financial responsibility and gradually improve your creditworthiness through consistent, timely repayments.

Remember that improving your CIBIL score is a gradual process that requires patience and discipline. By implementing the strategies outlined in this guide and using credit responsibly, you can work toward better financial health and access to more favourable loan terms in the future.