If you’re looking to apply for a personal loan in Bangalore, you probably understand how credit scores come to play. Indeed, your credit score is one of the most vital factors that lenders consider while vetting your loan application. So, what should your ideal credit score be? What should be your minimum credit score for getting a personal loan in Bangalore? Let’s find out!
The Minimum Credit Score Requirement
Although the minimum credit score requirements tend to vary according to the lenders, you’ll typically need a score of at least 700+ to get a personal loan from a top bank in India. Contrary to most lenders, alternative lending institutions like Qbera might consider your application regardless of the score if you meet even if your score is 575+, provided you satisfy a set of additional benchmarks. Some of these benchmarks are your debt to income ratio, employment experience, monthly salary etc.
How Does a Credit Score Affect Your Loan?
A borrower’s credit score is one of the biggest determinants of their creditworthiness. Lending institutions use this score to assess the overall risk involved in lending you funds. Since low scores often correspond to more instances of delinquency, lenders don’t easily offer instant loans to low credit score holders.
Even if you are approved for the loan, the interest rate will be extremely steep. This in turn, will almost immediately spike up your monthly instalment amount.
Should I Apply For a Loan If My Credit Score is Low?
While you can always apply for a personal loan with a credit score of 600 (or higher), it is best to send your application only when you’re confident about the approval. Check the eligibility parameters of different lending institutions and apply for the loan only when you meet the required criteria.
What Happens When You Do Not Meet The Eligibility Criteria Of a Specific Lender?
If you do not meet the eligibility requirements of a specific lender, they will immediately reject your application. Since the rejection happens after making a hard credit inquiry of your credit report, it also takes a toll on your credit score. In most cases, your credit score is knocked off by a couple of points after every rejection. So, if you’re rejected by multiple lenders, your credit score will take a massive hit. This will further hurt your chances of getting a new personal loan over the following few months.
What Should I Do If I Am Rejected For a Personal Loan Due to Low Credit Score?
If your personal loan application is rejected because of a low credit score, take some time to improve your credit report. Pay your debts down, consolidate high interest debts, and avoid taking new debts to speed up the process. If you’re financially disciplined enough, your credit report will noticeably improve over the next three to four months.
Now that you’re aware of how a credit score affects your personal loan application, follow our recommended guidelines and improve your credit score before applying for a new loan. This will boost your approval chances enabling you to get the required amount within your required timeline.