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HomeFinanceWhy is a Good Credit Score Essential for Any Loan?

Why is a Good Credit Score Essential for Any Loan?

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A credit score represents an individual’s creditworthiness based on his history of availing and managing credit-based financial products. Also known as CIBIL score, it is calculated based on a few factors such as defaults, settlements, past repayments, loan write-offs, etc. A CIBIL score around or above 750 is considered to be a good credit score. It is one of the primary criterion to avail an unsecured loan like a personal loan. Nonetheless, the CIBIL score is also crucial to apply for a secured loan. Therefore, it is essential to maintain a high CIBIL score and increase the chances of getting a loan approval.

There are other benefits to maintaining a high score as well, viz. –

  • Affordable interest rates – A healthy credit score will also improve the borrower’s chances of availing a loan at attractive interest rates. Consequently, one will be able to pay off the loan quickly.
  • Avail high credit limit – Another advantage of having a healthy credit score is that one can avail a higher loan amount from the lender. This is because a satisfactory credit score of a borrower reflects that he or she can repay the loan amount in time.

Therefore, maintaining a good credit score is essential. It can be done easily by following the below-mentioned steps.

How to Maintain a satisfactory CIBIL Score?

Adopting the below-mentioned steps will enable you to improve your CIBIL score.

  • A balanced combination of both secured and unsecured loans will have a favourable influence on your CIBIL score or credit rating.
  • A credit utilisation ratio below 50% of the sanctioned limit in a credit card can help you maintain a high score.
  • Make timely repayments of all loan dues.

Maintaining a credit score is necessary because it is one of the most essential eligibility criteria for personal loans. These loans have no end-use restriction and therefore, can be used to meet several financial expenses. They can be used to meet medical costs, consolidating other loans, home renovation, etc. Furthermore, these loans can be availed without any collateral.

How does a healthy CIBIL Score help?

If you improve your CIBIL score, you are considered as an individual who is financially responsible enough to avail credit-based financial products such as loans or credit cards. Every action you take while using such products is recorded in your credit report and has a negative or positive impact on your credit rating or score accordingly. For instance, if you miss a loan EMI payment or apply for multiple loans or credit cards within a short span of time, you will considered as a less credit-worthy individual by credit information bureaus and financers alike. Contrarily, if you have no records of missed EMI payments, you are considered as a financially responsible borrower. 

Benefits of Personal Loans

  • A borrower can avail substantial funds within 24 hours if they successfully complete the application process and meet the eligibility criteria.
  • Such loans come with flexible repayment tenor options.
  • A leading financial institution, Bajaj Finserv provides pre-approved offers on personal loans which help ease the process of availing loans by making it simpler and less time-consuming for borrowers. These offers are also available on numerous other financial products such as business loans, home loans, loans against properties, etc. You can easily check your pre-approved offer by submitting only your name and phone number.

A CIBIL score or credit rating around or above 750 is one of the main criterion that one needs to meet to successfully avail a personal loan. However, there are requirements too that need to be fulfilled to avail a personal loan.

Other Eligibility Criteria for a Personal Loan

Although the criteria varies between lenders, here are some basic pointers which most finances ask from prospective borrowers –

  • Age of the applicant should be between 23 to 55 years.
  • He or she must be a residing citizen of India.
  • The applicant must be employed at a public or a private limited company or an MNC.

One can also use the personal eligibility calculator before applying for such a loan to quickly check the loan amount that they’re eligible for. It can be done by following a few easy steps.

Therefore maintaining a good credit score is essential for any loan, secured or unsecured loan. It is one of the most essential eligibility criteria, especially when it comes to unsecured loans such as personal loans. Refer to leading lenders with such a CIBIL score to avail a loan at the most beneficial terms and features.

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