What Is A Credit Score?
A three-digit number between 300 to 900, which gives a quick idea of your credit health to the potential lenders is called your credit score. The higher the score, the better your chances of getting a loan. Authorized credit bureaus calculate your credit score in India like CIBIL.
What Credit Score Is Suitable For A Personal Loan?
It is advisable to have a minimum credit score of 750 to be eligible for a personal loan. The lenders will look for this minimum credit score before deciding whether to go ahead with processing your application. Before applying you must have the knowledge of the cibil score required for personal loan. A score of more than 750 will enhance your chances of approval of the loan application.
Role Of Credit Score In The Loan Process
CIBIL collects and maintains your credit-related activity like credit card payments, any late or missed payments, balance outstanding, etc. from banks, credit card companies and other lenders every month. Based on this information, CIBIL can calculate your credit score. If your credit tack is right, you will have a good credit score.
How To Improve Credit Score?
A high credit rating is an indicator of your high trustworthiness; a low score is a measure of low reliability. The former makes you an attractive borrower, a low score, will decrease your chances of getting a personal loan. Hence, if your score is below 675, you must improve it. Here are some tips for doing so:
- Check Your Credit Report Regularly- On applying for a personal loan, the lender will look for your current income and solid credit history. Hence, check credit scores regularly. This way, you can rectify any errors that occur in consultation with the lender.
- Pay Your Outstanding Credit Card Bills On Time- Do not neglect the payment of your credit dues. On applying for a personal loan, the lender will check your credit dues of at least the past six months. Any lapse in the timely payment of your credit dues is as an irresponsible behaviour on your part. Hence, if you want to approve your credit score, make it a point to pay your credit card bill on time.
- Make Timely Repayments Of Your EMIs- A right and consistent repayment record is vital for improving your credit score. Make sure to pay your EMIs regularly as it will reflect positively on your credit report.
- Track Your Co-applicants Payment Records- The payment pattern of someone with whom you are a joint applicant for a loan will affect your credit score. You must keep track of your co-applicants payment history. Make sure that they clear their dues on time.
- Be Selective In Your Loan Application- It is a common practice to enquire about the terms and conditions of the personal loan with multiple financial institutions to get the best deal. Each time you enquire with a different lender, it gets registered against your name. It lowers your loan credit score.
- Make A Perfect Mix Of Secured And Unsecured Loans- Secured loans are considered as asset creation and affect credit score positively, while unsecured loans have a negative impact. Try to maintain a perfect mix of both to positively affect your credit score. A good credit score will give you competitive interest rates and also increases your eligibility amount for a personal loan.
It would help if you with a good credit score to avail instant personal loan quickly and with a competitive rate of interest. In case your credit score is not up to the mark, you can improve it by adopting various means. This will improve your eligibility for a personal loan manifold.
