A credit score plays an important role in a personal loan. The reason for this is a loan is an unsecured loan and lender gives you this only on the basis of your credit history and the source of income. So your credit score has to be very good to get a personal loan. The bank considers your credit score on a loan. Before knowing that how a credit score affects your personal score and what should be the minimum credit score if you want to get a loan, let us know what a personal loan and a credit score are?
A Personal Loan
A personal loan is a kind of unsecured loan that allows you to borrow money from a bank or non-banking financial organization at some rate of interest for a period of time. This is known as the tenure of the loan. In a personal loan, there is no need to pledge anything to the bank as a security. If your income is good, your credit history is good and your age is more than 21 years, then you will easily get a loan otherwise you will have a problem with it.
Credit Score is Needed for a Personal Loan
A credit score is basically a measure of the customers’ behavior to deal with his/her debts. If you are good with your debts and loans then your credit score would be good otherwise it won’t. It ranges from 300 to 900. CIBIL is a company of India that keeps records of all debts of all the customers in India. If your credit score is not good it means that you haven’t paid your past loans or credit card bills properly or you’re no dealing properly with your present debts. So a good Credit Score is needed for a Loan. A credit score of more than 720 is considered a good credit score. But to get a personal loan your credit score should be 650 at least. If your credit score is less than that you might not be able to get a loan. So it is advised to you to keep your credit score up always because Credit Score is needed for a Loan