Why Your Credit Score
is Very Important for a Loan?

When you apply for a loan, the most important factor affecting your application is your Credit Score. A Credit score is a three-digit score ranging between 300 and 900, issued by Credit Information Bureau of India Limited. The company assesses and generates the Credit score for an individual based on his/her financial history such as several loan accounts, credit history, repayment record, and outstanding loan amount, etc. The higher your score is, the better your chances to qualify for a personal loan. A good Credit score falls between 750 and 900. The closer a person is to the highest score, the better are the chances of his/her loan application being approved.

Importance of a Credit score for a Loan

Faster Loan Approval
For borrowers with a good score, the approval process is relatively quick. One has to submit the necessary documents, and the funds are credited to his/her account in the stipulated time. People with a low score, on the other hand, may have to go back and forth, negotiating interest rates and tenures.

Better Negotiating Power
A good Credit score puts the loan applicant in a position of strength to negotiate with the lender for approval of a higher or upper limit of loan amount with minimal or nil paperwork. On the contrary, it can be hard for someone with a low or moderately average Credit score to get a significant loan amount

Better Interest Rates
A good Credit score leaves room for an applicant to bargain with the lender for approval of a personal loan with relatively lower interest rates. On the other hand, a low credit score may result in a rejection of the personal loan application, or the applicant might be sanctioned a loan at higher rates of interest than usual.

How to Maintain a Good Credit Score

• Borrow only what you can afford and repay and avoid approaching multiple lenders for different types of credit/loans at the same time
• Ensure that all your credit card and loan dues are paid fully within the stipulated time. Do not default on these payments.
• Ensure timely payments of bills everytime
• Make sure that you do not utilize more than 30 percent of the credit card limit and do check your credit report regularly for any inadvertent errors that can affect your Credit score.
• Increase your credit card limit when offered, and don’t overspend if you possess a high credit card limit or a prior availability of low-interest loans.

Conclusion

The Credit score plays a crucial role in a meeting an individual's financial goals. Whether it is a well-planned travel loan or an unexpected medical loan, a good Credit score can fulfill all aspirations.
A Personal Loan from genuine lenders like HDB Financial Services (HDBFS), can fulfill all your financial needs. Quick approval and disbursal, affordable interest rates, and customized solutions are some features that make HDBFS the best in the industry. Reach out to HDBFS through their various digital channels or visit the nearest branch. Please log in to https://www.hdbfs.com/ to know more.