The common perception among borrowers may be that a credit score of 650 or lower can be risky for their loan instinct. And perhaps its true! It is difficult to have a loan with a credit score of 650. Prominent banks propose a higher score of 750 or more. This is primarily strategic well to avoid unexpected risks from dishonest folks. Similarly, if you want a credit card then it’s unlikely to get a credit card approved.
What are the Fallout of a Credit Score lower than 750?
As it has been mentioned previously that a score lower than 750 can greatly impact your borrowings in future. However, we must be clearly aware of the fallout when the credit score remains low at 750 or lesser. Ideally, 750 is the ideal score to qualify for an instant personal loan or credit card. So, whenever next you plan to apply for a personal loan, ensure to approach with an enhanced credit score.
A credit score lower than 750 may not give you a personal loan, but a golden chance to improve it. This is strictly bounding on banks and financial institutions to entertain disqualified applications. Banks and NBFCs have been obligated by RBI to look for a score which meets the minimum threshold to approve a loan application. If you still proceed with a score lower than 650, then you’re at own mercy. It’s better to not be hopeful about loan approval and disbursal from the large financial giants. In case, you’re considered, chances for unfavorable terms and conditions apply.
Step to take for Successful Personal Loan Application:
To begin, take the self-surveillance step! Instantly get your free credit score and a detailed credit report to understand your exemption and qualifications to apply for best personal loans.
The best credit score for the best personal loan would be above 750.
Even when your credit score is low, it is possible for you to apply for a loan. Credit score is not the only determinant for your personal loan eligibility. So, as a borrower if you meet all the eligibility criteria, then you’re good to go for a personal loan, and the score matters zilch!
Let’s talk a bit about Home Loan here as an exception to the credit score. If you’re considering a home loan, then your credit score will matter the least. Since, a home loan can be admitted as a secure loan, the credit score makes negligible difference to the lender. A collateral is duly submitted at the loan disbursal for security.
Having explained the positive and negative situations, banks attach high importance to credit score. So, it’s almost mandatory to have a high credit score that matches your eligibility criteria. We would like to recommend some tried ways to enhance your credit score for good.
- Pay off your loans, debts and liabilities.
- Pay off your running or overdue bills
- Keep balances maintained on credit cards and other revolving credit.
To sum up: your credit score reflects on your financial behavior and spending pattern. This is closely indicative of your finance handling techniques. It preempts the lending institutions to stay on top of your credit position and how well can you pay off your debts in future as well.
Also read: What is CIBIL Score and Its Importance?