The CIBIL score requirements for vary from banks to banks and depend on a range of factors such as current employment, income, existing loans, and the .
There is no denying the fact that banks tend to lend to borrowers who have good to excellent credit scores for unsecured loans.
This is how banks view a range of credit scores:
Excellent Credit Score (Above 750): Borrowers with excellent credit scores usually have a higher chance of qualifying for unsecured loans and may also be given better interest rates and terms. Banks view them as low-risk borrowers who are likely to make payments on time.
Good Credit Score (between 700 and 749): Borrowers with good credit scores may qualify for loans, but they might not receive the most favourable interest rates and terms. However, banks view them as low risk.
Fair Credit Score (between 650 and 699): Borrowers with fair credit scores are vulnerable to face a higher degree of scrutiny from at the time of applying for unsecured loans. They may qualify for loans, but might encounter higher rates of interest and stricter terms.
Poor Credit Score (lower than 650): Borrowers with poor credit scores may find it challenging to qualify for unsecured loans from traditional lenders. They may need to explore alternative lending options or work on improving their credit score before applying for a loan.
So, even if you have a lower credit score, you may still qualify for a loan if you can show other positive financial attributes.
Frequently Asked Questions:
Why is it vital to protect yourself against identity theft?
One should protect their personal and financial information to prevent identity theft that can lead to fraudulent activity on accounts and damage credit score. So, one should use strong passwords, secure online transactions, and monitor accounts regularly for any suspicious activity.
What is credit counselling?
If you are facing difficulties in managing debt, you may consider seeking assistance from a reputable credit counselling agency. They can offer guidance on debt management strategies and negotiate with creditors on your behalf.
How often should one check CIBIL score?
Most experts recommend to check the credit score at least once in one year.
What is the key demerit of a low credit score?
Among several demerits, one of the key disadvantages is that you are likely to be offered higher interest rates even when a loan is approved.
Do banks offer loans on the basis of credit scores?
Yes, banks generally use credit score as a key factor in determining whether to approve a loan application. A low credit score may result in denial of credit or approval with less favourable terms.
