A fast-paced life can be very stressful. A vacation away from the city can be a good stress buster. All you need to do is choose a location, a hotel, and a travel option to have a good time. An international vacation can turn out to be the best but you may need a little help with the money. No, don’t look as far as liquidating your investments or borrowing money from a friend or a relative. You can easily pay for your international holiday by choosing a Personal Loan from a bank or a non-banking financial company (NBFC).
Now imagine that you made up your mind about the trip; applied for a Personal Loan, and await an approval with all your travel plans ready. In the last minute, you receive a call that your loan application is rejected.
That can be quite painful! But a poor CIBIL score can lead to the rejection of a loan application. To avoid such heartbreak and stress, know your CIBIL score beforehand.
Why is a CIBIL Score Important?
1) It Determines Loan Eligibility: Your loan eligibility depends on the CIBIL score. It is a good indicator of credit discipline. A good credit score shows that the borrower repays the loan on time. It indicates that there has been no default on the payment. A CIBIL score ranges from 300 to 900. The TransUnion CIBIL manages this. A CIBIL score above 750 increases the likelihood that the lender will approve your loan application.
Lending institutions check your CIBIL score and credit history. They do it as soon as they receive your Personal Loan application. This helps them know whether you have a good credit record. Upon verification of your credit history, the processing gets under way. Then, you can enjoy a Personal Loan at an attractive interest rate too.
2) It Decides Your Interest Rate: Lenders check your CIBIL score before deciding on the interest rate you pay. Delay or default on loan repayment and high credit card debt can bring down your CIBIL score. A low CIBIL score means high risk involved in lending money. Your lender can quote an interest rate higher than the normal rate to cover this risk.
You may be working for a reputable company with a fat pay package. You may need a small amount as a Personal Loan. Still, the lender can charge you a high interest rate due to a lower CIBIL score. Bajaj Finserv, a reputable non-banking financial company (NBFC), offers Personal Loans at an attractive interest rate ranging from 11.45% to 15.6%. Avail these to plan anything from an overseas vacation to a home renovation.
What Do You Need to Watch Out For?
1) Discrepancies: The CIBIL score comes along with a credit report. This contains details of your previous or existing loan accounts. You may have a good credit history. But there could be discrepancies in your CIBIL report. This could be due to a process-related error at CIBIL’s end. Or, your existing or previous lenders may mess up the report. Checking the CIBIL score before a loan application can help you spot errors. You get the time to correct them before you apply for a loan.
2) Correction: Always take a no-objection certificate (NOC) from your lender once you close any loan. This includes a Personal Loan, too. It is useful when the lender fails to report the loan closure to CIBIL.
When you notice an error in the credit report, report it to CIBIL. They have a well-defined process for correction. But this process may take some time. Identifying errors at the last moment can be a nasty surprise.
So, what are you waiting for? Check your CIBIL score and then apply for a Personal Loan. Just enter all your details, choose the loan amount and tenor, and pay the processing and security fees. And if all is well, your loan can get the nod in three minutes. And note that this also for those who may not be applying for a loan any time soon.