Credit score and credit history matter the most in loan approval and getting instant loans for a specific purpose. Credit history and creditworthiness are checked by the banks, and lenders as these are the basic requirements for borrowing a loan. They use the credit score or CIBIL considered by most banks and financial institutions. If you are living in a big city like Noida, Delhi or Gurugram, you can check for a personal loan in Gurgaon, Delhi or Noida by contacting a reliable lender.
More About Credit History
A credit history of CIBIL is a detailed record of all your repayment activities and borrowing which are all managed by credit bureaus authorised by RBI. A credit score depicts your behaviour on your credit spending and its usage. It consists of several pieces of information like payment history, several types of outstanding amounts, or any record of due date payment or financial issues. This information is checked and tracked by credit reporting or information agencies. The resulting credit report serves as a major document available for lenders when it is used to evaluate the complete loan application.
Impact and Role of Credit History on Personal Loan
Credit score or CIBIL is required to take any type of loan be it secured or unsecured. In the case of a Personal loan, creditworthiness is checked by financial agencies to know the behaviour of the borrower in the history. While taking a personal loan, a person should know some crucial things like loan approval, rate of interest, loan term, loan amount, and other alternate options. A person who is taking a loan should check the complete details of the loan with proper documentation procedures.
Here, we are providing some factors which are directly affected by the CREDIT or CIBIL score. Let’s know all of them:
Approval of Loan
If you are taking a personal loan to meet your financial expenses or any emergency at your home, you need an instant loan. The approval for the same will be based on your credit history. It indicates the level of risk while taking a loan. A strong Credit score expresses that you are in a good position and you are eligible for the loan approval. It indicates that you can pay your debts on time with suitable credit utilization.
On the other hand, a bad credit score is marked as red against the borrower who wants a personal loan from a bank or lender. It significantly decreases the chances of getting a personal loan approved. You can take a personal loan in your city with a good credit score. For instance: personal loans in Gurgaon, Delhi or Mumbai with better creditworthiness.
Rate of Interest
The rate of interest for the Personal Loan is also based on the credit score or CIBIL. Your creditworthiness will judge how much you are eligible to get interest rates at the best price. Interest rates directly correlate with the possible risks which are perceived by the lender. A good credit score will often translates a favoruable rate of interest for a personal loan. These things will help you save a good amount of money over the particular period of the loan.
Individuals who have very good credit scores will be eligible to get personal loans at a very low rate of interest. It results in decreased monthly payments with less interest paid. Borrowers with a poor credit score will only get a higher rate of interest which is not good for a long-term plan.
Loan Tenure and Amount
One another factor that comes to the line which is affected by the Credit history or CIBIL is the loan amount and tenure. With a good credit score, you can get more and more loan amounts with flexible tenure. In this way, you can easily manage all your finances very easily. On the other hand, if you have a bad credit score, you can’t apply for the preferred loan amount and you will get very less time for the repayment procedure. In bad credit, the lender or bank may limit your loan tenure and the amount you want on your personal loan.
Credit History Provides Several Other Options
One other thing which is necessary to note is that lenders and banking institutions prefer persons with good credit scores. They provide them with various offers, relaxations and flexibility in taking loans. Even if you have very little credit in your account but your CIBIL is higher, then the lender can give you an interest rate, but you need to talk to your lender.
On the other hand, with a poor credit history, you can’t survive longer in the world of loans especially personal loans because they provide a higher rate of interest.
Summary
Personal loans are used to meet unexpected financial situations and circumstances like home renovation, medical emergencies, urgent need of money, debt consolidation etc. CIBIL score or creditworthiness is one of the major factors which affects your loan amount or tenure, interest rate, approval of your loan, benefits and flexibilities, and loan processing.
