Everyone deserves access to quality education; it’s one of the best investments one can make for a brighter future. However, with rising tuition costs in India and abroad, funding higher education can be a challenge. That’s where education loans play a crucial role in bridging the financial gap. However, securing a loan with a low credit score isn’t always easy. However, getting a loan can be challenging with a low credit score.
Getting an education loan with low CIBIL score may seem challenging, but it’s not impossible. While most lenders prefer applicants with a good credit history, there are ways to increase your chances of approval even with a low score. In this guide, we’ll walk you through how to get education loan with low CIBIL score to help you secure the right financial support for your higher education.
Get a Secured Loan
In the case of an unsecured education loan, the credit score is the only evaluation metric left, besides income, for lenders to gauge your creditworthiness. So, if your score is on the lower end of the spectrum, chances are you might not be approved, or worse will be charged higher interest rates.
However, if you have an asset you can pledge as collateral, your credit score becomes a secondary factor to the lenders. In fact, you can even secure more competitive personal loan interest rates by putting up collateral.
Sometimes, it may so happen that you have a low education loan credit score, but for no fault of your own.
It’s common to have errors in your credit report, which can lower your credit rating.
To avoid such scenarios, it’s best to check your credit score regularly. Doing so will help you identify any issues the moment they crop, allowing for a quick resolution.
You can check your CIBIL score and correct any problems by visiting the official CIBIL website.
If you’re thinking of funding your own education but lack the required credit score, you can opt for a guarantor to improve your loan eligibility. However, make sure the guarantor, preferably, has a high credit score and immaculate credit record. Why? Because lenders would be more likely to offer you a better offer on the low credit score student loans if your guarantor has a decent credit history.
Alternatively, you can also opt for a joint loan with a co-signee to improve your odds of approval.
There are various government sponsored schemes that make education loans more accessible. For example, the Central Sector Interest Subsidy Scheme (CSIS) offers interest subsidies to students from economically weaker sections and has more relaxed credit score criteria.
Display Proof of Income
If you’re wondering how to get education loan with low CIBIL score, understand that demonstrating a consistent and reliable income can significantly improve your chances. Lenders want assurance that you or your co-applicant have the financial capacity to repay the loan on time.
To do this, submit clear and recent proof of income, such as salary slips, bank statements for the last 6–12 months, Form 16, or Income Tax Returns (ITRs).
A stable income reassures lenders that the loan repayments will not be missed, making them more likely to approve your education loan with low credit score.
How to Improve your Low CIBIL Score
Here’s how you can improve your low CIBIL score to secure an education loan.
Step
Explanation
Target
Reduce Credit Utilization
This is the amount of credit you’re using compared to your total available credit. High utilization negatively impacts your score.
Aim for below 30% usage
Pay Bills Timely
Timely payment of EMIs, credit card bills, and utility bills builds your repayment history and improves creditworthiness.
100% on-time payments
Check Credit Report
Review your report for errors such as incorrect personal details, outstanding dues already paid, or unauthorised accounts.
Dispute errors promptly
Avoid Multiple Loan Enquiries
Applying for too many loans at once leads to hard enquiries, which can lower your score.
Apply for credit only when necessary
Close Unused Credit Accounts
Too many open accounts can reflect poorly, especially if they show inactivity.
Keep 2–3 active accounts
Conclusion
While securing an education loan with low CIBIL score may seem difficult, it is certainly achievable with the right approach. At the end of the day, your academic goals shouldn’t be limited by a low credit score. By understanding how to get an education loan with low CIBIL score, staying informed, and being financially proactive, you can overcome the barriers and access the education you deserve.
Tata Capital offers education loans with competitive interest rates, easy eligibility and swift approvals. Enjoy flexible EMI plans and extended loan tenures for a comfortable borrowing experience with us.
What is the minimum credit score for a student loan?
There is no fixed minimum credit score for a student loan, but a score above 650 improves approval chances. Minimum credit score requirements vary across lenders.
Are student loans calculated in credit score?
Student loans are part of your credit report, like any other investment loan, and can impact your credit history and credit score. Paying on time maintains a healthy credit score.
How to improve CIBIL score immediately?
It takes around 4-12 months to improve credit score depending on the credit history and consistency of positive credit behaviours.
Can we increase CIBIL score in 10 days?
You can increase your CIBIL score by checking and understanding your CIBIL report. It takes 4-12 months to increase the credit score.
29 April 2025
5 mins read
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