Is the Credit Score Requirement for a Small Personal Loan Different Than for a Personal Loan?

Is the Credit Score Requirement for a Small Personal Loan Different Than for a Personal Loan?

March 29, 2022 0 By mindmingles

Are you looking to apply for a personal loan? Are you worried and confused that you might not meet the eligibility criteria? Do you want to know if your credit score can ruin your plan of getting a personal loan? Here is all that you need to know when looking for personal loans.

 

First things first—yes, your credit score does have an impact on the approval of your personal loan, be it a big amount or a small denomination. However, it is not a conclusive factor that determines the approval of a loan. So, even if you have a lower than required CIBIL score, it does not rule out your eligibility to apply for the loan. You can still put forward the application for a personal loan.

 

Personal loans are helpful to take care of any urgent personal finance requirement like home renovation, medical bill assistance, travel plans or weddings. Any amount starting from ₹ 75,000 to a maximum of ₹ 35,00,000 can be applied for under this category of loan. A personal loan is an unsecured loan that does not require any collateral in lieu of the amount lent out. 

 

It is understandable that any lender will look into a few standard factors before approving a loan for you. A good credit score, also called the CIBIL score, is one of the things that improve your chances of getting a loan sanctioned for you. Even a small personal loan needs to be backed by a good CIBIL score. In the case of personal loans, it should be above 750. 

 

The CIBIL score is not the sole criterion based on which the personal loan is approved. Some other factors that are checked for accessing the eligibility of a personal loan are age, income, job stability, credit history, and work experience of the applicant. So, even if you are not sure about the credit score that your profile comes under, do not hold back from applying for a loan. Several other factors may help to get your loan approved without any problem. 

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The factors that can help improve the chances of getting your personal loan approved are  listed below:

  • A good CIBIL score
  • A record that shows timely repayment of previous or existing loans
  • Fewer applications for multiple loans at the same time
  • Preference for a longer repayment tenure

If your CIBIL score is low, put in a joint application (with your parent or spouse) for the loan. Ensure that they have a strong credit score and a good income (especially if the loan amount required is large). The documents required along with the application are quite basic. They include a valid photo ID, income proof, salary slips, address proof, and employment certificate. 

 

Another key aspect that one must consider in the case of personal loan is the rate of interest at which the loan is being offered. The rate can vary from one person to another according to the amount, tenure, etc. It usually ranges from 10.50 percent to 24 percent. The rate of interest is significant as it adds to the total cost of the loan that you will bear over the repayment time. 

You can use the online personal loan EMI calculator to see the impact that the rate would have on the amount of the EMIs. You can find out exactly how much money you will have to repay each month. The EMI would remain fixed each month if a fixed rate of interest is applicable. There are also floating interest rates that are subject to changes with existing economic scenarios.