IS Credit Score Necessary for Personal Loan?

Is Credit Score Necessary For Personal Loan Apply

Posted by Creditkaro

Credit Score March 19, 2020

A lot has been talked about the relationship between the credit score and the credit card. We have always associated a credit report with a credit card, but have you ever thought that it also has an impact on your loan approvals?  Personal loans are crucial because the reason would apply for a personal loan online or offline is because of an immediate need for funds for a specific motive. You might apply for personal loan for marriage in your family, to cover a pending renovation, a holiday, to fund small projects, paying off debts, medical bills, etc.

While you are sitting home thinking that you have submitted a perfect application with all the necessary documents, you must know that there is a chance you might get rejected if you do not have a good credit score. This might sound like an unpopular opinion, but your credit score is a very important factor even in the case of personal loans. 

It is a common fact that your credit score measures our creditworthiness. Lenders look at your credit score whenever you apply for a personal loan or any other loan product. Personal loans are generally considered to unsecured loans that do not require any collateral but what lenders also take into consideration is your credit health. Your credit health signifies how efficient you are with your payments. Lenders want to make sure that you take your credit health seriously because they don’t want you to become a bad debt for them, which is why you need to prove that you are creditworthy. 

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First, let’s discuss why is a credit score important in case of personal loan:

When you fill an application for a personal loan and wait for approval, lenders go through a lot of areas multiple times to ensure there no loopholes in your application and then your credit score comes into play. Your credit score speaks a lot about you, these are the following reasons because which your credit score is so important:

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Speaks about your credit health:

IS Credit Score Necessary for Personal Loan?

Your credit health speaks a lot about you and your ability to pay back debts within the promised timeline. A good credit score assures the lenders that you are good at your payments. A low credit score will suggest that you have not been punctual and have missed your due dates in the past which obviously don’t want.  If you want to check free credit score online, click here.

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Quicker loan approvals:

IS Credit Score Necessary for Personal Loan?

If you have a good credit score, then you’ll have a smoother experience with your loan approvals. A good credit score will ensure that the loan process is over before you know it. Also you will have better chances of getting approved because there will be a bigger range of loans and lenders available for you in the market. So, it is very important to get a credit score check.

Lower interest rates:

If you have a low credit score you’ll not be in a position to negotiate for a lower interest rate. In fact, you’ll have to settle for whatever the lender has to offer. Because either way you are in need of funds. On the other hand, if you have a good credit score then you get a lot more options. Because more lenders would be interested in your profile. You then have an upper hand over the lenders. Which will help you negotiate a lower interest rate? You can simply check your credit score online and find out where you stand.

Higher loan amount approvals: 

IS Credit Score Necessary for Personal Loan?

Lenders would always be skeptical before lending a large amount to someone with a low credit score. If you have a good credit report it will assure the lenders that you are good with your money. And you have the ability to qualify for a higher amount than they usually offer. You also get to enjoy a larger variety of lenders willing to lend. You more than the other so, at the end of you get a competitive amount.

What if a borrower does not have a credit score?

As we discussed your credit score represents your portfolio. Lenders check your application on multiple levels. Then the only thing standing between you and the money is your credit report. If you have a low score and bad repayment history then chances are high that you would get declined. And if you are an ace scorer on your credit report. Then you are likely to get a plethora of benefits along with the money. But If you do not have a credit score at all. Then your age, your income, and your job stability are taken into consideration by the lenders to judge your credibility.

Also, Read Out - Factors That Can Boost Your Credit Score

What is a good credit score to get instant approvals?

Customers often ask this question; everybody wants to know exactly where they need to be in terms of their respective credit scores. In order to get approved not only for loans but also for higher limits. We thought it is time we break it down for you:

300 – 600: 

Your credit score ranges from 300 to 900. Anything which is below 600 is considered poor and almost denies your chances of getting approved for a loan. It clearly shows that you’ve had a bad credit history. And that you have missed your due dates in the past.

600 – 750: 

This is the middle range, which is generally considered to be ‘Fair’. Your chances of getting approved with anything below 750. Are comparatively lower than the people who have a score of more than 750. You might get approved but would have fewer options.

750 – 900:

This is the ‘Good’ to the ‘Excellent’ category. This is the category you would want yourself to be in. Chances of getting approved in this case are almost certain. And you will also be approached by most of the lenders in the market. Since you have so many options you can also negotiate for a lower interest rate and a higher loan amount.

Every time you apply for a credit product you need to remember that your credit score will play a crucial role. So Check Free Credit Score Online which is why it is very important to build a good score. Before deciding to apply and maintaining it for the good of your own financial stability.  financial stability. At CreditKaro you can get a free credit score check online! So hurry to check your credit score online now!