Lenders nowadays consider your credit score if you need a loan. If you do not have a credit history, the banks can reject your loan application or you may get a loan on a higher interest rate. About 80 percent of loans are disbursed to people with a CIBIL score of more than 750. Anything lower may hamper your chances of securing a credit card or loan.
When you apply for a loan, the lender checks your credit report as it gives information about payment history, personal and income details, overdue amount to be paid and other details. Some banks do consider other eligibility factors and a credit score of 600 above to be acceptable for approving loan application.
Advantages of Strong Credit Score for Loan Application
You may apply for a secured or unsecured loan, in both incidences your credit score will be a crucial factor in deciding your loan eligibility. If you have had a stable financial journey overseeing regular payments and no or minor defaults, you may get a decent credit score. Always follow financial management plans to keep your CIBIL score greater than 750 to 900.
A CIBIL score of 0 or -1 or between 1 and 5, will mark you negatively in eligibility of securing loan as you may then not have credit history only for less than 6 months, hence not enough data for banks to trust you with credit. A bad credit score of 300 and above but less than 550 or 600 will draw a red flag on your loan application.