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Credit Score Is Important To Get A Personal Loan

Credit Score is important to get a Personal Loan

Why is Credit Score important to get a Personal Loan?

A personal loan turns out to be very useful when you are in need of instant money for a small vacation, for renovating your home, for child’s education fee, or if you are planning your dream wedding. The reason why people nowadays, are inclined more towards personal loan is the freedom to choose their own reason to use the funds, it doesn’t matter to the lender.

However, in order to avail the benefits of a personal loan, your credit score plays a very critical role. First of all, let us understand what do we mean by a Credit Score.

What is a Credit Score?

A Credit Score (or a CIBIL Score) is a statistical number assigned to you by the Credit Bureau depending on your credit history. It is used by lenders to determine your creditworthiness before lending you the loan amount. It is the top most influencing factor to avail a personal loan.

Usually, the credit score of an individual ranges between 300 to 850 or above, with 900 being the best score. The higher the credit score, more are the chances to access the benefits of a personal loan. Whether you have a good credit score or bad, it depends on the lender you are borrowing the money from. Qbera provides instant personal loans with minimum credit score starting from 625.   

It is not necessary that every individual has a credit score. If you don’t have a credit history, your credit score will be -1. Don’t worry, you can still apply for a personal loan. In such cases, your creditworthiness will be ascertained based on your social media accounts, your mobile phone usage and by asking you to answer few surveys. Thanks to the advent of digital media that lenders have come out with various methods to check the genuineness of a borrower. Don’t worry, lenders do not proceed to access these social media accounts without taking prior permission from the borrower.

How a Credit Score affects your Eligibility for Getting a Personal Loan?

For most of the lenders such as banks, NBFCs and P2P lenders, a credit score of 750 is considered as the threshold to be eligible for a personal loan. Your loan will be approved faster if your credit score is 750 or more. Your loan application may even get rejected in the initial process if you have a bad credit score. Hence, it is advisable that you maintain a good credit score before applying for a personal loan.

How to Maintain a Good Credit Score?

 

  • Set Payment Reminders

 

It would be insensible to tell you to make payments on time when you have already missed them and dropped down to that bad credit score. Hence, we insist you to set reminders for each and every loan that you have availed in the past.

Nowadays few banks also offer payment reminders using their online portals through which you receive a text or an email reminder before the payment is due. Certain loan providers also offer automatic deduction of EMIs from your bank account where you won’t have to worry about remembering the payment dates.

 

  • Avoid Unnecessary Expenses

 

Hold back the shopping spree in you. Your credit score will be low if you exceed more than 50% of your credit limit.

 

  • Do not close old Credit Card Accounts

 

If you think that closing your old credit cards will help you improve your credit, then you are probably on the opposite track. A closed credit card account may reflect a negative credit history, consequently lowering your credit score. So, don’t close those old accounts.

 

  • Do not keep Moving your Debts

 

If you have multiple credit cards, transferring one debt to another will only worsen your credit score. It is better to pay off all the cards on time rather than owing the same amount with very few open accounts.

 

  • Renew your Credit History

 

You can start with opening new accounts and make sure that you pay them off on time. This will bring up your credit scores.






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