How does credit score play an important role in getting your loan approved and setting HDFC personal loan interest rate & SBI personal loan interest rate?

How does credit score play an important role in getting your loan approved and setting HDFC personal loan interest rate & SBI personal loan interest rate?

by Ramit

At times there may be events in your life when you need an additional fund to meet your short term or long term financial goals or financial exigencies. Whether it is a medical emergency, wedding, need for renovating your home, planning an abroad trip etc., HDFC, SBI and other banks, and NBFCs offer personal loans at reasonable HDFC personal loan interest rates; SBI personal loan interest rate, etc. to those with a good credit profile. Thus, for those looking out to apply for an affordable HDFC personal loan interest rate, SBI personal loan interest rate must know credit score is one of the first filters that lenders consider for assessing an applicant’s personal loan application. 

Note that those with an existing relationship with SBI or HDFC bank can directly contact their respective customer care service to know if they can get a personal loan at the preferential interest rate and at suitable conditions. 

What is the meaning of a credit score & why is it necessary to consider it before availing of a personal loan?

A credit score is factored in by lenders for assessing the personal loan applicant’s credibility. If you can effectively manage your finances and have a strong holding over your credit habits, you might have a strong credit score. For many of the lenders, a credit score equaling 750 and above is considered good for approving personal loan applications. 

CIBIL is considered the most trustworthy credit bureau. Lenders like NBFCs and banks generally assess the applicant’s CIBIL score when processing their application. Though there are other bureaus too, like CRIF High Mark, Experian and Equifax providing equally accurate scores, CIBIL is widely popular in the market. Personal loan applicants with a lower CIBIL score of less than 750 usually face a difficult time availing of personal loans. These applicants either are denied a loan or are given approval at a higher rate of interest to compensate for the higher credit risk involved in lending such applicants. Even lenders use various other factors such as age, income stability, location, profession, work experience etc., to assess the eligibility of the applicant. However, when it comes to applying for a personal loan, having a strong credit score for your loan approval is important. 

Reasons why CIBIL score is important for personal loan approval?

Credit report data analysis

CIBIL collaborates all the data or information from numerous financial institutions to form your credit report. Credit bureaus generally deliver the score of the individual in a three-digit score ranging anywhere between 300 and 900. Remember that the higher your score, the higher is your chances of taking up personal loan approval. 

Judge your credibility

To simply put it, your CIBIL score is nothing but a numerical presentation of your creditworthiness. The score assists in determining your lender as to how capable you may be to repay your personal loan EMIs based on your loan schedule. A lender can also review your credit score to hedge their credit risks by endowing with good loan offers for the ones with higher scores. However, those with lower CIBIL scores are either rejected a good loan offer or given approval at a higher rate of interest. Thus, it is important for all to timely check their credit report for keeping track of their score and information, and in case of any discrepancy, can report the same to the concerned bureau or lender to resolve it. Doing this assists you to stay ready for a personal loan because requirements for this loan can come up anytime in future, and checking your score just before submitting your loan application is of no use. It is owing to the fact that building or improving a strong credit score takes a lot of time and patience. 

Loan application approval

Having a strong CIBIL score acts as a catalyst when submitting a personal loan application. At the time when a specific lender gets an application for a personal loan, the bank checks your credit report before processing your loan to judge your creditworthiness, which helps to disburse the loan faster without any delay.

Interest rate

HDFC personal loan interest rate, SBI personal loan interest rate and rate of interest available by other lenders serve as a deal-breaker when an applicant applies for a personal loan with a strong credit score. Those applicants with a strong CIBIL score are generally in a better position and are usually provided with the lowest interest rate at suitable terms & conditions. Apart from this, you should note that your HDFC personal loan interest rate, SBI personal loan interest rate or interest rate offered by other lenders can affect your loan tenure significantly. On being provided with a lower rate of interest on a personal loan, your chances of opting for lower repayment loan tenure increases. 

Loan amount

The ticket size of a personal loan is also dependent on your credit score. Those having a good credit score means that they have the potential to avail themselves of a higher personal loan amount on their loan approval. Moreover, having a good credit score also makes sure that your personal loan simply gets approved with less documentation requirement. Apart from these, there are also some of the additional benefits of having a good credit score. They are:

* Nowadays, few organizations have begun performing credit score checks before hiring a specific candidate. Holding a good credit score of 750 and above adds to your chances of securing a good job.

* Moreover, few landlords and also societies might request your credit report before they rent their flat to you.

* Furniture rental organizations also may perform credit report checks before providing you with a particular price. Having a strong credit score can assist you in getting a great deal.

Thus, before you submit an online application for a personal loan, it is advised to regularly review your score so that you are prepared to take up a personal loan at a lower HDFC personal loan interest rate or SBI personal loan interest rate in events of financial crunch or emergencies.

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