Loan Tips: If you are taking a loan from the bank, then definitely take these precautions..
You need a loan to buy a car, but whether the bank will give you a loan or not, depends largely on your credit score. It is also called the CIBIL score in common parlance. It is a three-digit number, between 300 and 900. This number is your credit history. For example, whether you have taken a loan before or not. If you have taken it, then whether you have repaid it on time or not. Even if you have just inquired about a loan, its record is also captured in these numbers.
How is the credit score decided?
The credit score is calculated by the major credit bureaus of the country. RBI has given licenses to four credit information companies for this - Credit Information Bureau (India) Limited (CIBIL), CRIF Highmark, Experian, and Equifax. Among these, CIBIL is so famous that people have started calling credit scores as CIBIL score. These companies evaluate your credit score, which reveals your financial health.
Importance of credit score
Whether you want to get a credit card or a loan of lakhs for a house or car, a credit score is always required. If your credit score is good, you will get a loan on easy terms. You may also get some concessions in the interest rate and loan repayment period. But, if the credit score is bad, then the bank may refuse to give a loan. Even if they give a loan, it will be with strict conditions and a high interest rate.
Why does the credit score go down?
There can be many reasons for a low credit score. Such as missing a loan installment, delay in credit card payment, or closing the old credit card. If you make several inquiries for a credit card or loan in a short interval of time, then also your credit score can go down. To keep the credit score good, the credit card bill and other EMIs should be paid on time.
How good is the credit score?
A score of 650 to 749 is considered good. It can get you a loan at normal interest rates. A credit score of 750 to 799 is quite good. People with this score can get loans at attractive interest rates. A credit score of 800 to 900 is considered excellent. You can get as much concession in loan as possible according to your credit score.
Credit score should not be less than this.
The credit score starts from 300 points. If your score is up to 549, it means that your record of repaying loans is very bad. It is almost impossible for you to get a loan from a reputed financial institution. A credit score of 550 to 649 is considered average. You can get a loan on this credit score, but the interest rate can be high.
Effect of bad credit score
You will face difficulty in getting a new loan.
You will have to pay more interest.
Pre-approved loan offers will decrease.
The loan application may get rejected.
If you get a loan, it will be with strict conditions.
PC Social media