In today’s life, any individual may require money to fulfill personal requirements which includes home renovations, consolidate debt or plan a dream wedding. This amount can be borrowed by banks, credit unions or online lenders which are called personal loan. The amount of personal loan has to be paid back to the lender with some interest in a particular period of time. Various Tenders may charge fee for personal loan application as well.
There are 2 types of Personal loans: – Secured & Unsecured
The personal loan which required some type of collateral as a condition of borrowing is termed as secured loans.
For example – an applicant can secure his personal loan with cash assets such as Savings accounts or with some Physical assets such as a car or property. The lender has the adult authority to keep the collateral to satisfy the debt in case the borrower defaults on loans.
In case of unsecured personal loan, no Collateral is required which is a bit risky for banks or lenders hence the borrower needs to pay a higher interest rate for personal loans.
Let us discuss how a personal loan is dependent & related to the candidate’s CIBIL score. CIBIL Score is a 3 digit numeric presentation of the applicant’s credit history. In other words, it shows an individual’s credit payment history across loan types & credit institutions over a period of time. It varies between 300-900.
The lenders measure your creditworthiness by seeing your credit score as it showcases how dependable or risky you are as a borrower. The credit score becomes all the way more important when you apply for collateral-free loans.
CIBIL Score System Started in India in the year 2001 & has been considered as the most trusting System since then. The companies include Equifax, Experian & High Mark is considered as the most popular credit information companies in India.
All the companies have their own unique System of denovating CIBIL score but one thing which remains common in all of them is that if an applicant does not have any credit history, he will be assigned a-1 credit score & if any person’s credit history is older than 6 months, he will be given 0 credit score.
A CIBIL Score 750 or above is considered good & the applicant can have the personal loan from the lender easily after satisfying other eligibility criteria. In case the applicant has a CIBIL score that is lower than 750 it becomes a struggle for the applicant to have a personal loan from the bank but if the CIBIL score is lying close to 750 then the consumer can have the personal loan but at a higher interest rate.
So it becomes of utmost importance to maintain a CIBIL score of 750 so that you can borrow money from Banks on lenders when you require it most. Keep a check on CIBIL Score becomes more important as you never know when you require money & hence the requirement of a personal loan arises.