One of the main factors that make you eligible to get approval for a personal loan is your CIBIL score. Essentially your credit score, CIBIL (Credit Information Bureau (India) Limited) generates a summary of your credit profile in the form of a numeric value to inform lenders about your financial status. Lenders gauge your ability to repay loans based on how high/low this score is.
Credit Score and a Personal Loan
A personal loan can be taken by individuals to meet any purpose, from financing medical emergencies to vacations. This is a good way to access funds, and if you have a credit score that meets your lender’s requirements, you can avail a personal loan online instantly. Funds could be in your bank within a day. Typically, banks and other lenders have a threshold credit score or CIBIL score below which a loan may not be granted. This score falls in a range of 300-900, and 600 is acceptable. It’s a good idea to check your CIBIL score at Finserv MARKETS before you apply.
Why is a Credit Score Important?
A credit score is important (and a high one, preferably) for the following reasons:
- It lets lenders know about your credit history/creditworthiness.
- It establishes your relationship with lenders, such as your bank, and helps you get financial benefits like quick loan approvals/flexible tenures.
- It helps you get fast loans with funds transferred rapidly. Furthermore, you can get online approval.
- It aids you in availing lower interest rates.
Can You Get a Loan With Low Scores?
If you do find out that you have a low credit score, your number one priority should be to find out how to improve CIBIL score. Nonetheless, with a low score, can you still get approval? The answer is ‘yes’, albeit with conditions. These constitute the following:
- You may get approval for lower loan amounts
- You may have to pay high interest rates
- You may have to display additional proof of stability of an income source
- You may have to show collateral (like gold, property, etc.) to avail the loan
Can You Improve Credit Scores?
It’s easy to find out how to improve your CIBIL score. Consider the following:
- Debt Repayment – You should make sure any outstanding debt is paid off before you apply for further loans.
- Use your Fixed Deposit – In case you hold a fixed deposit, you can get a credit card against it and this improves your credit score.
- Joint Loan – Take a personal loan with a joint holder. If that holder has a high score, it will reflect on you and you may get loan approval.
- Timely Payments – Make timely payments on credit card bills and any EMIs you may have availed of.
Living in uncertain times has become normal, and planning ahead helps. You may need a personal loan at any point in your life, and you can easily get one if you show creditworthiness that guarantees lenders of sound financial health. Go over to Finserv MARKETS to get the best view of loan products and how to get them easily.