Neha Agarwal wants to take a personal loan to renovate her home. But she is worried that her low credit score will lead to her personal loan application getting rejected. Is Neha right to worry about her credit score? What can she do to overcome this hurdle?
Continue reading to understand the impact of a poor credit score on your personal loan application and smart ways to overcome it.
What is the impact of my CIBIL™ Score on my personal loan application?
A personal loan comes in quite handy when you require funds to meet emergency or other planned expenses. You can use a personal loan to pay for medical emergencies, fund your dream wedding, go on a holiday, purchase a flagship mobile, renovate your home or for any other reason. There are no restrictions on the end usage.
Furthermore, since personal loans are unsecured, you don’t have to provide any collateral to get the loan. All these factors make personal loans the go-to loan product for millions of individuals.
But the catch here is that – to get a personal loan, you need to demonstrate to the lender that you’re financially stable and are likely to repay the loan on time. How do lenders evaluate this factor? They rely on credit scores and the credit history of the applicant.
The first factor that a lender evaluates when you apply for a personal loan is your credit score. The credit score is a numerical parameter that establishes your creditworthiness. It's based on the summary of your credit history, the debts you have taken, your repayment history and other factors.
- The credit score ranges from 300 to 900. The closer it is to 900, the better are your chances of personal loan approval.
- Credit scores are provided by authorized credit ranking agencies, also known as credit bureaus.
- You can quickly check your credit score for free on our website. Enter your mobile number, email address and PAN number to fetch your latest credit score.
“Most lenders require borrowers to have a credit score of 750+ to be considered for a personal loan with collateral.”
To know more about the impact of low credit score on personal loan
