A Personal Loan is perfect for short or medium repayment terms. Whenever you apply for a Personal Loan from any NBFC, the first thing lenders evaluate is your CIBIL score.
A CIBIL score is a testimony of your creditworthiness and is a significant aspect of your credit quality. Banks and financial institutions consider it when you apply for a mortgage, a Personal Loan, or other borrowing products.
You can use this credit type for various purposes, including vacation, debt repayment, medical expenses, and marriage expenses. Since a Personal Loan is unsecured, there is no need to include any collateral, and the Personal Loan rates are also much more affordable.
However, lenders examine the credit history and determine a borrower’s ability to repay the loan.
Minimum Credit Score Requirement for a Personal Loan
If you are unaware, you must know that a CIBIL Score is a three-digit numeric overview of your credit record. A CIBIL score can range from 300 to 900, and a credit score of 800 or higher is the best CIBIL score for a Personal Loan because it allows you to get great offers on loans and mortgages.
Before approving your loan request, banks and financial institutions must ensure you can repay the borrowed amount. Your credit score assists in determining your risk of default.
A high score indicates that you have been a responsible borrower, paying your credit card debts and EMIs on time. A lower credit score increases your chances of loan disapproval.
Most banks and financial institutions consider a CIBIL score of 750 or higher to be ideal. It would not be wrong to say that you can obtain a Personal Loan if your CIBIL is 750 or higher. And the greater the score, the higher your loan approval odds.
Can You Apply for A Personal Loan with A CIBIL Score Below 550?
If your CIBIL score is less than 550, most banks and financial institutions will dismiss your loan request. A low CIBIL score indicates that you are financially unstable and will struggle to repay the loan.
Few lenders offer Personal Loans to people with bad credit. However, rates of interest will be extremely high. Before taking out a loan, check the agreement and compare the fees and interest rates.
Understanding the Impact of Credit Score on Your Loan
Below are three crucial impacts of a CIBIL Score on a Personal Loan application.
Your Credit Score is as essential as your job history, wage, and other approval factors when applying for a loan. Ensure that your score is at least 750 to 800 is the best CIBIL score for a Personal Loan.
Credit Report with No Errors
Errors can sometimes find their way into a clean credit file and ruin your lovely Credit Score. To rule this out, review your report before uploading your loan application.
A Crucial Part of Repayment History
The loan applicant’s repayment history is one of the criteria for loan approval. How do they discover it? By looking at your CIBIL score, and a good repayment history equals a high credit score.
Consider These Factors Before Personal Loan Apply
Below are two fundamental aspects to consider before applying for a Personal Loan.
Examine CIBIL score
Before applying for a Personal Loan from an NBFC, it is essential to understand your credit situation. You should check your CIBIL score because it will tell you where you stand in case of credit history and reimbursement.
In case your CIBIL score is low, you can work on them over time and raise them by taking the appropriate steps.
Once you decide to take out a Personal Loan, you’ll need to search for lenders offering competitive rates. Furthermore, it is prudent to evaluate and compare Personal Loan interest rates.
Given the intense competition, many financial institutions like Poonawalla Fincorp provide attractive Personal Loan interest rates.
The Bottom Line
Your CIBIL score functions similarly to a credit report card. It is estimated by assessing several factors, such as reimbursement behaviour, credit history, and credit type. Comprehensive credit history makes it easier for lenders to make an informed decision about whether or not to offer you a loan.
Head to Poonawalla Fincorp for a reliable Personal Loan lender to get credit at a reasonable interest rate today!