How To Increase Credit Score For A Personal Loan?
A financial emergency can arise at any point of time in anyone’s life, creating a need for instant cash. A personal loan is now most people’s go-to option in case of the need for extra funds. A personal loan is an unsecured debt that can be used for a variety of purposes without the reason being specified to your lender. This loan is offered at low-interest rates and for shorter tenures without much documentation or a guarantor.
You can apply for a personal loan online and borrow the required amount, from the comfort of your home. If you are considering borrowing a personal loan, you must have also come across the terms credit score and CIBIL score. In this article, we will take a closer look at credit scores and credit scores for a personal loan.
Surely, a personal loan is one of the easiest loans to borrow, requiring minimal paperwork, no collateral, and no guarantor. A personal loan has its share of benefits, but a credit score is one of the major eligibility criteria to be met while applying for a personal loan, online or offline. If you are borrowing a loan for the first time and have no clue about credit scores and how they impact your loan application, you are at the right place. In the further sections, we will discuss the credit score required for a personal loan and help you understand in detail what credit score is and how it is calculated.
A credit score is like the historical overview of your borrowing and credit-related activities. This score is assigned by credit rating agencies in your country that maintains a record of your credit cards and previously borrowed loans to assess your credit score. The score is an assurance to your lender that you are worthy of borrowing the loan and are capable of repaying the same.
Table of Contents
In this article about credit scores for personal loans, you can read about improving your score, how credit scores impact your loan application, and much more. The following topics will be covered in this article:
- What is Loaney?
- What is a good credit score?
- How to increase credit score for a personal loan?
- Benefits of taking a personal loan to improve credit score
- Things to consider while getting a personal loan to increase credit score
What is Loaney?
With a life-threatening disease spread worldwide and the fear of leaving homes taking over, spread across the world, we have seen a shift of all major services and facilities to online platforms. The digitalization of financial and banking services has also been a major development for the sector making it a convenient and hassle-free procedure for the common people. You can now avail almost every important service online within a few clicks from the comfort of your home.
Personal loan borrowing is also a common service that can be availed of by people online using various websites and platforms. One such platform that offers easy personal loans online is Loaney.
Loaney is a trusted online personal loan lender. This platform offers small personal loans to its clients at very low interest rates for shorter repayment tenures. You do not need a lot of documents or collateral while applying for a personal loan on Loaney. The platform ensures complete confidentiality of user data and does not ask for a reason to be specified for borrowing the amount.
Loaney offers a personal loan of up to INR 15,000 to its clients at affordable interest rates for a time duration of around two months. The platform offers a seamless procedure from registration to the disbursal of funds. All you need is easily available documents like your Aadhar card, PAN card, Bank account with net banking, linked to your mobile number, and a passport-size photo.
The application procedure is easy. All you need to do is fill in your personal details and make sure genuine information is provided. Within a few minutes of applying, Loaney will verify your details and review your application. Once reviewed and approved, the amount applied will be transferred to your account and can be withdrawn by you at your convenience. Borrowing a personal loan from Loaney can be beneficial if you need urgent cash for any financial emergencies.
Now let us take a look at credit scores and move ahead with our understanding of the eligibility criteria to get our personal loan approved.
What is a Good Credit Score?
A credit score is a three-digit number assigned by credit rating agencies. This score reflect5s your credit history and lets your lender know that you are willing to pay back the amount you borrow as a loan. A credit score is an important factor that determines whether you can avail of a personal loan or not.
In India, credit scores are assigned by TransUnion CIBIL Limited which is one of India’s four credit rating agencies. TransUnion CIBIL Limited maintains a record of people’s and company’s loan-related and credit-related activities. The credit score also known as CIBIL score falls within a range of 300 and 900. The minimum credit score for a personal loan is 750. A good credit score is 750 and anything above it.
In the following sections, let us look at a personal loan for a low credit score and the credit score required for a personal loan.
How to Increase Credit Score for a Personal Loan?
In the above sections, we have discussed personal loans and credit scores and have also looked at the minimum credit score for a personal loan. It might seem like, without a good credit score you will not be able to borrow a personal loan. A low credit score does not imply that you are not eligible for a personal loan. You can still apply for a personal loan for low credit but you might have to face some challenges. To prevent yourself from facing any troubles while applying for a personal loan, you should work on increasing your credit score. The following steps can be followed for the same:
- Do not delay payments of debts and repay all bills on time.
- Maintain older credit accounts to strengthen the credit history.
- You must avoid taking too much debt at the same time.
These steps will not just help you in increasing your credit score but will also ensure the lender that you are withy of the loan and capable of repaying the amount.
Benefits of Taking a Personal Loan to Improve Credit Score
Borrowing a personal loan has numerous benefits and can be borrowed for a variety of reasons. In this section, we will also be looking at a personal loan for low credit scores.
The uses of borrowing a personal loan include investing in your business, renovating your home, funding your vacation or wedding, and investing in higher education. Since you do not need to specify a reason for borrowing a personal loan, One of the lesser-known benefits of borrowing a personal loan can also be repaying your previous debts. Repaying your previous loans will not only clear any negative records from the past but will also be able to improvise your credit score.
Things to Consider While Getting a Personal Loan to Increase Credit Score
Borrowing a personal loan for a low credit score can be beneficial for you if you wish to increase your score to the credit score required for a personal loan. The following factors should be kept in mind since you do not want to end up in even more debt while clearing your previous accounts.
- Borrow an amount that you are capable of repaying.
- Borrow the amount at low interest rates and ensure that you are eligible to borrow at your current credit score.
- Explore your loan-providing options and make a suitable choice as per your financial situation.
1. How much of a loan can you get with a 600 credit score?
A good credit score is 750 and most lenders do not offer a loan for a 600 score. If you wish to borrow a loan with this score, you can trust Loaney to provide you with a personal loan of up to Rs. 15,000.
2. How can I increase my personal loan amount?
Your personal loan amount will depend on your credit score. The higher and better your credit score is the more you can borrow as a personal loan. For a better credit score, you must ensure timely payments of bills and loans and stay under the credit card limit.