15 October, 2024 | 12:17 IST
The credit score of the borrower plays a major role when it comes to securing a personal loan in India. Whether you’re planning to meet some big-ticket expenditure like a home renovation, a wedding, or an unexpected medical expense, personal loans can offer the financial support you need. With the advent of completely digital lending platforms access to personal loan offers has become quite convenient. However, to successfully obtain a personal loan, lenders closely assess your creditworthiness through your credit score. With a higher credit score you can get quick approval for a personal loan and cheaper interest rates. Further, lenders also look for a minimum credit score before approving your loan application.
So, what’s the minimum credit score required for a personal loan? Let’s take a look at what affects your score and how you can improve it to increase your chances of getting approval for a personal loan.
Table of Contents
A credit score is a three-digit number that reflects your creditworthiness, based on your credit history. It usually ranges between 300 and 900, with a higher score indicating better financial responsibility. The credit score is calculated by credit bureaus like TransUnion CIBIL, CRIF High Mark, Equifax and Experian, that take into account factors such as repayment history, credit utilisation and the length of credit history. A good credit score is essential for smooth approval of a personal loan as it reassures lenders of your ability to repay the loan on time. You can check your credit score for free on platforms like Moneycontrol. It also offers the option to download a detailed credit report instantly.
When applying for a personal loan, your credit score acts as the first filter for lenders. Since personal loans are unsecured — not backed by any collateral — banks and financial institutions rely heavily on your credit score to assess your risk profile. A higher credit score for personal loans not only increases your chances of easy approval but can also help you negotiate better interest rates and loan terms.
Many lenders in India have a minimum credit score requirement that you must meet to be eligible for a personal loan. On the other hand, a higher credit score increases your chances of personal loan approval.
While the minimum credit score for a personal loan in India usually ranges from 650 to 750, many lenders prefer applicants with a credit score of 750 or above. Those with lower scores might still be eligible depending on the lender’s criteria, but they may have to settle with higher interest rates.
ALSO READ: What is a good personal loan interest rate?
ALSO READ: What is a good credit score? Here’s your checklist for a healthy credit score
Improving your credit score is important if you wish to increase your chances of personal loan approval.
It's essential to check your credit score regularly to stay informed about your credit health. Moneycontrol offers the feature to check credit score and receive a detailed credit report. You can also apply for an instant loan of up to Rs. 15 Lakhs on the Moneycontrol app. This loan is offered in partnership with top lenders including Aditya Birla FInance Ltd., L&T Finance Ltd., Fibe (EarlySalary Services Pvt. Ltd.) and Niro Money.
In conclusion, while applying for a personal loan, your credit score is one of the most important factors that lenders consider. A higher credit score increases your chances of approval, gets you better interest rates, and simplifies the loan approval process. Use the resources provided by Moneycontrol, including the free credit score tracking service, to monitor your score and make informed financial decisions.
Share it in your circle
Table of Contents
Explore Top Lenders for Instant Loan upto
Get Instant Loan up to ₹50 Lakhs with Zero Paperwork from Top Lenders
100% Digital
Quick Disbursal
Low Interest Rates
