Get a Personal Home Equity Loan for a Bad Credit Score
It is very difficult to be such that a person does not need money for his anticipated and unexpected needs like rent, fuel, children’s education, marriage, hospital bills, etc. We take a loan to buy a new house or buy a car. At the same time, taking a personal loan is the most popular way to meet your needs. Apart from this, credit cards are also a popular way to meet your needs.
Unlike a car loan or a home equity loan, a personal loan can be used for any need. Because the debtor has nothing to do with how and where you use that money. In today’s time, it is quite easy to borrow money or take loans from banks, non-banking financial companies (NBFCs), and P2P lenders. When you take a personal loan from a bank, the credit score and credit history of the individual play an important role in determining their eligibility for the loan.
What to do if the credit score is low or bad
You can take a home loan from lenders even if you do not have any credit history, but you will have to submit more documents to the lender so that the lender can satisfy you about your ability to pay EMIs on time and your intention. Your educational qualification and job profile are the important criteria used by the lender. For example, if you are a doctor or a CA, it ensures your regular income. Or if you are a government official, there is every possibility of getting a home loan even if you do not have a previous credit history. Regular investment in Systematic Investment Plans (SIPs) can also provide you with easy loans. Banks may also ask you to get a guarantee from someone who has a good credit history and credit score. These are some of the optional parameters that can be used by the lender in the absence of regular credit reports.
Personal loan eligibility based on credit score
To qualify for a personal loan, the applicant must have a credit score of 750 or above. The higher the credit score of the person, the higher will be his eligibility to get the loan. Before processing or approving a personal loan application, the lender checks whether the individual has a credit score of 750 or above. Therefore, you must check your credit score before applying for a personal loan. A good and high credit score ensures quick approval of the loan.
What is a credit score?
The credit score is calculated based on the credit-related activities of the individual like banking, credit card payment, EMI payment, EMI payment, etc. Credit Information Bureau of India Limited (CIBIL) maintains the credit-related activities of individuals and companies and this data is used to calculate the credit score. Lenders prefer applicants with a good credit score as it is a sign of a healthy credit history, which means, the individual can repay the loan on time.
Know what is the role of credit score
Although credit score is a starting point for lenders to consider lending to borrowers, it is not the only criterion that lenders look at when giving loans. So even if you do not have any credit history, you can take a home loan from lenders, but you will have to submit more documents to the lender so that the lender can satisfy your ability and your intention to pay EMIs on time. If you are living in rental accommodation, they can also verify the regularity of your rental payment. Your spending and saving habits can be gauged from your bank statements, which can determine whether you will be able to repay the loan on time.
How to avoid a bad credit score?
Before applying for a loan, check your credit score and try to improve it. Thus, when you apply for the loan, your credit score will be high and your chances of getting the loan approved will also increase. Here are the things you can do to avoid a bad credit score:
pay on time
Partial, late payment or missed payment of EMI or credit card bills can hurt your credit score. So, make the full payment on or before the due date.
Do not exceed your credit limit
If you use more than 50% of your credit limit then you get a low credit score. So keep your expenses under control. Don’t spend on useless things.
Do not apply for more than one credit card or loan at a time
Too many credit cards and loan applications can also lead to a bad credit score, as each rejection lowers your credit score.
Maintain a balance between secured and unsecured loans
A personal loan is a type of unsecured loan which is provided without any collateral or security, it can be balanced by a secured loan like a car loan or home loan.
How can I get my credit score?
Once a year, you can get your credit report for free. Which will have a credit score obtained from CIBIL, Experian, or Equifax. You can apply for a credit report online on the websites of these three credit bureaus.
Get a Personal Loan for a Bad Credit Score
Although you may have a health insurance policy to provide you with timely and adequate healthcare, in case of emergency hospitalization, your cashless claim may not work and you will have to pay for hospitalization expenses. You have to do it from your pocket and later you have to claim its reimbursement. In this situation, either you have to liquidate your savings or have to borrow to meet the expenses. Worst case scenario, what if you have a bad credit score and the bank rejects your loan application?
What if there is no credit history?
There are also a large number of people in India who do not have a credit history. However, in this age of technology, lenders have come up with avenues to give loans even to people with no credit history. Innovations in the financial sector are helping not only customers but also lenders to explore potential markets that are yet to be explored. This can help lenders increase their profits and market share.