Apr 12, 2021 ●12 min read
Is it good to apply for a personal loan if we have a low Credit Score
We can apply for a personal loan even if we have a low credit score. Both banks and Non Banking Financial Companies (NBFCs) grant us the personal loan. However usually, the lower our credit score, the higher will be the interest rate on the loan amount. Here are a few things you need to know about personal loans and credit score, and how they affect your loan application approval.
Personal loans is an unsecured loan which we can take for our variety of needs like for education, for wedding, for travelling, for medical expenses, home renovation, etc. An unsecured loan is a loan for which we don’t need any collateral or security.
As an instant personal loan is an unsecured loan where lenders rely upon your ability to repay the loan by checking your credit score. But what is the credit score? The credit score is determined by the applicant's credit history, the amount of credit he / she has taken, has he / she repaid it timely or were they defaulted, and many other factors too.
A credit score is actually a number between 300 and 850 that determines your credit history and helps the banks and lending companies in understanding your financial health via credit transactions carried out in the past. Higher the credit score, better are the chances of getting a loan. The credit score above 700 is considered to be good. The score between 580 and 699 is considered fair. The credit score below 579 is considered to be poor.
If you have a low credit score don’t feel disheartened. There are fair chances that you can improve your credit score and get instant loan personal loan approval. Following are the points which will help you to improve your credit score:
❖ You should pay your credit card bills in full timely. Partial payments or paying only the minimum amount is not a good idea.
❖ In case you neither have a credit card nor any bank is willing to give you one, you can opt for a secured credit card. For that you can open a Fixed Deposit with the bank and take a credit card against it. The amount can be upto 80% of the fixed deposit. Paying back your bills on time will boost your credit score rapidly.
❖ Applying for too many loans at the same time not only results in loan application rejection but it also affects your credit score, so don’t do it.
❖ Restrict your credit usage. Don’t exhaust your credit limit completely. Otherwise it will impact your credit score adversely.
❖ You should try to maintain your accounts when you are trying to improve your credit score. Clearing your previous defaults will help you improve your credit score.
❖ Maintain a balance between your secured and unsecured loans. This will have a positive impact on your credit score.
❖ You can apply for a loan for a longer repayment tenure. This way you will be able to lower your EMI and give you more time to arrange for funds.
❖ Show increase in your income. This can be a raise in your salary or you can show some extra source of income. Now that you know how to improve your credit score, ensure that you are choosing the right lender who doesn’t take advantage of your weak financial health to charge unexpectedly higher interest rates.
At Zavron Finserv, you can apply for a personal loan even if you have a low credit score. To apply for a personal loan perform the following steps:
● Visit our website www.zavronfinserv.com
● Go to the right hand corner and click on ‘Apply Loan’ option
● Fill the application form by giving necessary details for the Personal Loan.
● Submit the required documents.
● We will arrange an appointment with our relationship representative to collect the required documents.
● We will verify the documents and a personal discussion might be arranged.
● After a quick verification, your loan will be approved and the amount will be disbursed within 2 working days.
We are soon coming with our own personal loan app, stay tuned to learn more about it.