A personal loan helps you pay for your financial needs when you are in a tight spot. You can avail the loan to fund your varied needs and pay them back at your convenience and comfort. Moreover, the application process is much easier too. All you have to do is visit the website/app of the lender, fill in your details in the application form, submit the documents and the loan amount is in your account in no time. However, for all these, you must meet the eligibility criteria of the lender. One of the significant personal loan eligibility criteria is the credit score. Lenders look at your credit score before they start processing your application. Therefore, you must check your credit score before applying.
Here are a few reasons why it is important to check the CIBIL score before availing a personal loan.
- Helps determine your personal loan eligibility
Your CIBIL score is an indispensable part of the eligibility criteria. It could get challenging to meet the eligibility if you have a low credit score. Usually, lenders inform the applicant of the minimum credit score required. You need at least a credit score of 650 to get a personal loan. However, a credit score of 700 or above can help you get better deals. While some lenders reject the application if you have a low credit score, many lenders accept the application with high-interest rates and additional documents.
- Lets you know of your creditworthiness
By checking your credit score, you can gauge your creditworthiness. If you do not have a credit score, it means that you do not have credit experience at all. You might not get a big-ticket unsecured loan with this score. If your score is between 350-650, you are still not a favourable applicant, though you can qualify for a few loans. The best credit score to get affordable loans and good deals is 750-900. With this score, you can get the best loan offers.
- Helps you avoid rejections
Once you check your credit score, you will know if you should apply. Applying for a personal loan with a low credit score can lead to application rejection and eventually a negative remark on the credit report and credit score. So, by checking the credit score, you can avoid getting rejected for the loan and instead work towards improving the score before applying.
- You get to know what to expect from the loan
Now when you know about the importance of credit score, you will agree that it affects the loan terms. Lenders consider the credit score while determining the approval and loan terms. If you have a high credit score, you can expect a higher loan amount, low-interest rates and favourable tenure. You can also get the best loan offers and negotiate with the lenders for the loan terms. If you do not know your credit score, you might not be able to get the best offers due to unawareness.
Your credit score is a crucial part of the personal loan application process. It can affect your loan tenure, interest rates and even loan amount. Therefore, you must check your credit score before availing the loan and avoid applying if it is low or inadequate.