According to data, there is a spurt in India’s personal loan demand. The personal loans segment grew by 26% (year-on-year) in FY24, which is very high despite regulatory action by the RBI to contain the robust growth in unsecured loans. Reports stated that larger loans of Rs 10 lakh and above increased their share in value terms, while loans under Rs 1 lakh continued to dominate in volume.
If you are planning to apply for a personal loan, it is essential that you should know the conditions that you must meet to get one. The most important criterion is having a minimum credit score. Credit score is assigned to every person and it is a gauge to measure the creditworthiness of an individual. It is important since a personal loan is an unsecured loan. Every lending institution — be it a bank or a NBFC — is wary of lending personal loans since it the borrower does not need to pledge any security or collateral to get these loans. In other words, a personal loan carries a high risk compared to other loans such as home loans which are considered secured loans (where the borrower pledges an asset to obtain the loan).
What is a good credit score to get a personal loan
The credit score of a person varies according to the credit behaviour of the person. “The minimum CIBIL score for a personal loan is between 720 and 750. Having this score means you are creditworthy, and lenders will approve your personal loan application quickly. They may also offer you your chosen loan amount at a nominal interest,” says major NBFC Bajaj Finserv. It also adds that a credit score between 600 and 700 can also get you a personal loan, but the conditions might not be as favourable as those that one can get with a score of 720-750. A score below 600 could render you ineligible for a personal loans.
India’s biggest private sector bank, HDFC Bank, states, “Major banks typically require a credit score of 700 or above for loan approval, offering better interest rates and terms to higher-scoring applicants.” One must note that CIBIL, the most popular credit bureau, assigns credit score out a maximum score of 900.
In the modern age, it is not important to always have the money in your pocket to buy that dream phone, TV, fridge, go on a vacation, or even get married. Personal loan is one of the great enablers for the modern consumer and provides quick access to funds. Since emergency requirement of funds is not only for gratification of impulse and/or discretionary purchases, it is important to know what minimum credit score you need to have to get a personal loan. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
