A personal loan also known as an unsecured credit option is perhaps the simplest and easiest kind of loan option to attain. They are not dependent on any security and can be utilised to serve a vast range of financial requirements like a kid’s higher education, medical exigencies or repaying off debts. When placing an application for an unsecured loan like a personal loan, a lot of parameters are considered and the most crucial among them is your credit score. So, your credit score check online must be performed before you apply for any credit options. By conducting a credit score check free online, you will get an idea regarding your credit standing and according to this must make amends to your credit behaviour to improve and build it.
Why is your score crucial in the loan approval procedure?
As earlier mentioned, a personal loan is an unsecured credit option and is not dependent on any security or collateral. In such scenarios, it is very risky on the part of the lender to avail money. Here’s where your score steps in. If you hold a good credit score, then this shows your disciplined financial behaviour and your credibility as a borrower. An excellent score can make the approval of the loan procedure smooth and hassle-free. However, ensure to note that your score is not just the sole parameter that decides your eligibility for a personal loan. Various other parameters like your existing debt amount, income, etc. come into the role too.
What’s the ideal score requirement to get a personal loan?
There’s zero such magic number denoted as an ideal score to get the personal loan. However, a score of over 750 is looked upon as an excellent number. This can fetch various loan deals at a reasonable rate of interest and affordable repayment tenure.
Your credit score is low, so how can you get a personal loan?
If you hold a poor credit score, there are a few crucial things you must do to make the approval process for a personal loan swift.
Stable income –
If you hold a steady income flow, you can get a personal loan even if your score is poor.
Good balance in your bank –
With a good bank balance, you can create an excellent first impression as well as smoothen the overall credit approval procedure.
Lower loan proceeds –
If you hold a poor score, you may still manage to get a loan of a lower amount. Please ensure that the rate of interest may be on the higher end under such cases.
Repayment past record –
If you make the due repayment timely, you can form an excellent score, which in turn allows you to secure a personal loan.
Also Check: Credit Score Check Free Online
Common frequently asked questions (FAQs)
What’s the minimal CIBIL score requirement for availing a personal loan?
Lenders usually do not specify any minimal credit score requirement for the personal loan application. However, a credit score equaling 750 and above is considered good by lenders for loans. This credit score reveals a lot regarding your credibility as a borrower and the lender’s chances of approving your loan application with a higher credit score.
How can you get a personal loan having a weak credit score?
There are several lenders who may approve your application for a personal loan despite holding a low credit score. However, the rate of interest charged may be higher.
Is 550 looked upon as a strong score for a personal loan?
No, 550 is not considered a strong score. A credit score ranging between 300 and 600 is looked upon as favourable by lenders.
Can you get a personal loan without any credit score?
A few financial institutions and banks approve the loan application of new-to-credit individuals. However, if it is not accepted you can still opt for the security-based loans, which infers loans based on securities like gold, property, etc. However, it is advised to form a strong score as that can assist you get loans and credit cards simply.
What things you must factor in when submitting a personal loan application?
When you apply for a personal loan, then there are various parameters you must factor in like loan repayment tenure, loan proceeds, etc. These factors are important as they assist you in determining your repayment potential.
Can you get a personal loan with a credit score equaling 600?
Yes, you can avail a personal loan. However, the rate of interest and the terms may not work out in your favour.
What are the important things you must do before placing an application for a personal loan?
Review your credit score –
It is crucial for you to learn about your credit health before you apply for a loan. You must review your credit score as it will endow you with an idea about your credit standing in terms of your repayments and credit history. If your score is low, you may take time to work on the same and gradually enhance it by undertaking the correct measures.
Fetch your credit report for free –
You can approach the official site of the CIBIL and claim your credit report for free if you have not already availed it this year. The RBI (Reserve Bank of India) has made it a must for all the bureaus to provide one report for free every calendar year.
Browse and then shortlist the lenders –
After you decide to avail a personal loan, you require looking for lenders that may be offering an excellent deal on the loan. It is best if you browse for the best deals and choose the one that is highly favourable for you. Owing to the high competition, many financial institutions offer a competitive rate of interest on personal loans. So, ensure to look out for the best loan deals that can provide you with maximum benefits.
Apply just with a few lenders –
After the lenders are shortlisted as per your preference, check out the loan deals they may be willing to offer you. You must stay careful and avoid making any multiple credit applications within a short time span as this would trigger multiple credit inquiries. Various hard inquiries may hold a negative impact on your credit score.