Is Your Credit Score Affecting Your Personal Loan Eligibility
11 January, 2025
Synopsis
- A credit score reflects your debt repayment capabilities.
- A higher credit score typically leads to better loan terms.
- Making timely repayments towards your debt may help improve your credit score.
Personal Loans may be your best way out when you need urgent funding. However, before applying for one, you should know about the credit score required for Personal Loans. This is because Personal Loans are unsecured loans where there’s no collateral needed. Therefore, lenders assess your creditworthiness, income and employment status to determine whether you’re eligible for a Personal Loan. This article talks about why your credit score matters for meeting Personal Loan eligibility criteria.
Understanding Credit Score
A credit score is a numerical indicator of your ability to repay debt. It is a three-digit number generated by credit information companies on the basis of your ability to manage debt. The higher the credit score, the better are your chances of securing favourable loan terms. Not paying your loan EMIs on time or delay in Credit Card bill payments typically leads to a drop in your credit score.
What is the Ideal Credit Score Required for a Personal Loan?
To get a Personal Loan approved hassle-free, it is recommended that you maintain a credit score between 720 and 750. A higher credit score tells the bank that you exhibit responsible credit behaviour.
Benefits of a High Credit Score for Personal Loans
When it comes to a good credit score, more is always better. Here are some benefits of having a high credit score when opting for a Personal Loan.
Quick Approval: The chances of getting a Personal Loan based on credit score is relatively higher if your credit score is on the higher side (above 750). This is because banks see you as a low-risk borrower who is more likely to be able to repay their loan.
Attractive Interest Rate: Some banks may offer a lower interest rate when you meet the Personal Loan credit score requirement.
Pre-approved Loans: With a good credit score and a long relationship with the bank, the bank may offer you pre-approved loans. Typically, these loans have shorter processing times.
Apply for Xpress Personal Loan Online Seamlessly
You can apply for paperless Xpress Personal Loans with HDFC Bank and enjoy a wide range of features, including attractive interest rates, loan amounts of up to ₹40 Lakh and flexible tenures.
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Frequently Asked Questions
What is the minimum credit score for a Personal Loan?
The minimum credit score is usually 685, which can vary from bank to bank.
Can I get a loan on a 650 credit score?
Depending on the lender, you may be able to secure a loan with a credit score of 650.
What makes a good credit score?
Timely payment of loan EMIs and Credit Card bills may make your credit score better.
What credit score is good for a loan?
A credit score of 750 or higher is usually considered good for a loan.
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*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Personal Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
