What Credit Score is required for a Personal Loan?
People take personal loans for almost any reason, from funding a marriage to paying a part amount for education or health purposes. It’s easy to take a personal loan, provided you fulfil some basic criteria and prove that you’re eligible. First and foremost, whenever you avail of any kind of loan, you have to show that you are financially healthy enough to repay the loan. CIBIL scores let you know about how healthy your financial condition is. Many lenders, banks and financial companies request you to provide an adequate CIBIL score if you wish to avail a personal loan.
Personal Loans – Features
A personal loan has many features you should know about before you venture to take one. Here are some key aspects:
- A personal loan is an unsecured loan. That means you don’t need collateral to avail of it.
- Funds you get approval for can be used at the discretion of the borrower, as the loan is for a borrower’s personal needs.
- You can borrow an amount of a maximum of Rs. 25 lakhs on a personal loan.
- With flexible loan tenors ranging from 1 – 5 years, you can choose a repayment schedule suiting you.
The best personal loans offer you interest rates as low as 12% per annum, as you will discover at Finserv MARKETS.
What is a credit score?
You may find the personal loan product of your choice, but to get approval you need to have a good credit score. A CIBIL score or a credit score is a number assigned to a person, and acts as an indicator of that person’s financial health. The number is a three-digit number and reflects your credit history to date. It lets lenders know about your status with respect to any outstanding loans you may have, ability for repayment, investments, etc. A report is generated with the score, which ranges from 300 to 900. Typically, a credit score of 700-750 and above is considered acceptable for approval of a personal loan. The higher your credit score, the higher is your loan approval amount.
Advantages of a High Credit Score
You can probably tell by now that a credit score on the higher side can help you to get the best personal loans. Here’s why:
- Lenders evaluate financial indicators of borrowers before approving loans. According to your credit score, banks and other lenders can find out, through your credit report, how prior payments have been made, your revolving credit utilization debt, etc.
- If your financial records indicate a high CIBIL score, you may get loans you want in amounts you require.
- A high credit score also ensures that you get loans with substantially low interest rates as lenders are guaranteed of your creditworthiness and repayment ability.
Points to Ponder
You can keep your credit score high in a number of ways, not least being the avoidance of debt. Even if you aren’t considering loans currently, you may need to take them in the future. Therefore, Maintaining your credit score at a sufficient level will stand you in good stead for the future. For more information on credit scores and personal loans, saunter over to Finserv MARKETS for a precise picture.