Abroad Education Loan with Low Credit Scores: How to Get a Successful Approval?

Studying at a leading University abroad brings unmatched excitement and endless possibilities to thrive. Like most Indian students, if you are counting on an education loan to fund your foreign studies, then be informed that you will have to meet certain eligibility criteria. While the process and eligibility might appear simple, one of the most important factors is having a good CIBIL score.

A CIBIL score (Credit Information Bureau (India) Limited) exhibits the creditworthiness of an individual, based on their financial behaviour. Most Indian lenders analyse the CIBIL score before approving any kind of loan, including education loans for studying abroad.

Unfortunately, a low credit score can lead to loan rejections or unfavourable terms. This scenario is more common than you might think. Whether it’s a parent as a co-applicant or even yourself, a low score can be a stumbling block, delaying or derailing your dream of international education.

But here’s the good news, a low credit score doesn’t mean a hard “no.” With the right approach, lenders, and expert guidance, you can still get the financial backing you need. Keep reading this article to know everything about this concept, it might give you the green light to get started with your education loan in India for studying abroad.

How is the Credit or CIBIL Score Assessed?

The CIBIL score ranges from 300 to 900. The higher your score, the better your chances of securing a loan. This score is calculated based on the following parameters:

Factor	Weightage	Impact on Score
Repayment History	35%	Missed or late payments damage scores heavily.
Credit Utilization Ratio	30%	High usage signals risk; ideally, stay under 30%.
Length of Credit History	15%	Longer histories reflect financial maturity.
Credit Mix (Secured/Unsecured)	10%	A balanced mix shows responsible credit behaviour.
New Credit Inquiries	10%	Frequent applications indicate financial constraints.

The CIBIL report, available at CIBIL’s official website, provides a detailed account of these factors. Students or their co-applicants can access it to evaluate their scores.

As you already know about the score range, it’s time to interpret them. Let’s check the details for education loans without collateral or with collateral in the next section.

What is Considered a Low Credit Score?

For overseas education loans, most Indian lenders expect a CIBIL score of 650 to 700 or above from the co-applicant.

Score Range	Rating	Interpretation
750 – 900	Excellent	Smooth loan approval with favourable terms.
700 – 749	Good	Usually acceptable; some scrutiny expected.
650 – 699	Fair	Possible approval with higher interest or collateral requirements.
300 – 649	Low	High risk; loan likely to be rejected.

In most cases, a score below 650 is considered low. However, some lenders focus more on collateral value and future earning potential rather than just the credit score, especially when students are headed to reputed Universities abroad.

If your or your co-applicant’s credit score isn’t high, then don’t panic. Some workarounds and strategies can help you get positive loan approvals, read ahead to know more about them.

How to Get an Abroad Education Loan with Low Credit Scores?

With the right approach and practical strategies, you can secure an education loan even with a low credit score. They include:

Go for a Collateral-Based (Secured) Loan
Lenders are more willing to approve loans when backed by substantial tangible assets like property, fixed deposits, or LIC policies. Collateral reduces the perceived risk significantly.
Choose a Strong Co-Applicant or Guarantor
Having a co-applicant with a high credit score and stable income improves your loan eligibility. Some lenders also accept additional financial guarantors to mitigate risk.
Target Flexible NBFCs & International Lenders
While Banks have stringent requirements, NBFCs and International Lenders have more applicant-friendly terms. They assess academic merit, University ranking, and earning potential and are generally lenient on credit scores. So, consider an NBFC education loan or from the International Lenders.
Highlight Admission to Reputed Institutions
Lenders see students enrolled in top-ranked Universities as low-risk because of higher employability and salary potential. Your admission letter is more than just an acceptance, it’s proof of your academic excellence.
Opt for Smaller Loan Amounts Initially
Smaller loans are easier to approve. Once repayment starts and your score improves, you can apply for top-up loans if needed or consider alternate funding options.

Now that you have gone through the tips, it is time to look at Financial Institutions willing to consider low credit score applications, especially when you meet other eligibility criteria like collateral or reputed Universities.

Who Offers Abroad Education Loans with Low Credit Scores?

Some of the leading Indian Banks, NBFCs and International Lenders provide loans to students even with low credit scores under certain conditions. These popular choices offering low credit score education loans are listed below.

Lender	Loan Type	Credit Score Flexibility
State Bank of India	Secured	Accepts low scores with high-value collateral.
Punjab National Bank	Secured	Flexible with low scores if security is strong.
Credila	Secured/Unsecured	Case-based approvals. Considers University, course, and co-applicant’s income.
Avanse	Secured/Unsecured	Student profile and earning potential take precedence.
Auxilo	Secured/Unsecured	Willing to lend with low scores with collateral or guarantor.
Prodigy Finance	Unsecured (No collateral/co-applicant)	Doesn’t rely on credit score; focuses on future income.
MPower Finance	Unsecured (No collateral/co-applicant)	Focuses on future income potential and University rankings.

Approaching the right lender even in low-credit scenarios can ensure successful loan approvals. However, if you have time, then we recommend you improve your scores before commencing the loan application process.

How to Improve the Credit Score for an Abroad Education Loan?

If you have a few months before applying, then these tips can help to boost your score and increase loan approval chances:

Settle Outstanding Dues Immediately: Clear any overdue credit card bills, EMIs, or loans. Even partial payments help improve the score gradually.
Maintain Low Credit Usage: Keep your credit card usage below 30% of your limit to indicate responsible usage.
Avoid Multiple Loan Applications: Each application generates a ‘hard inquiry’ which lowers your score. Apply smart, not often.
Fix Errors in your CIBIL Report: Sometimes, scores drop due to reporting errors. Check and dispute inaccuracies through the CIBIL dispute portal.
Pay EMIs Before Due Date: Timely payments, even for small amounts can create a positive payment history that improves scores.
Diversify Credit Types: Having a mix of secured and unsecured credit, with timely repayments, helps improve the score over time.

To conclude, while a low credit score can make obtaining an education loan for studying abroad more challenging, it is by no means the end of the road. With strategic planning, and improving your score gradually, you can still fulfil one of the most important criteria for education loans.

At Élan Overseas Education Loans, we don’t just process loan applications, we solve problems. From low credit scores to complex financial profiles, we have helped thousands of students secure overseas education loans when others said “no.” Our customized solutions and personalised support ensure that you are never alone in your funding journey.

Don’t let low credit scores hold you back, connect with Team Élan today to turn your ambition into achievement!