A personal loan can be of great help in times of financial distress. Not only are these loans easy to get as there is no need for collateral, but there is also no restriction on the end-user. However, in order to get a personal loan amount of your choice, along with a convenient repayment term and interest rate, you need to have a good credit score.

What is the Minimum Credit Score for a Personal Loan?

The minimum credit score for personal loans is between 730 to 750. Credit scores range from 300 to 900, with 900 being the highest. Higher the score, greater is the chance of getting a loan at favourable conditions.
The credit score minimum and maximum range for personal loans are between 600 and 900, although having a 900 CIBIL score is rare. Although 600 is the minimum, it is still hard to avail of personal loans at this score. Any number above 750 is seen favourably by lenders.

Zet App Credit Score Builder

If your score is above 750, you can easily get a personal loan or any kind of loan from lenders at an interest rate and repayment tenure that suits your needs and wants. You can get personal loan with low credit score too but it decreases the loan amount.

Why is it Important to Maintain a High Credit Score?

As mentioned previously, if you wish to join a university, you will have to clear the entrance exams and the score that you get will determine your eligibility. This score will also have an impact on the subjects you can choose, the fee you will have to pay, etc.

Similarly, your credit score will determine your loan eligibility. Higher the score, better are your chances of getting a loan at favourable terms and conditions. Here are some of the reasons why it is important to maintain a high credit score.

Defines your Creditworthiness

A high credit score can only be achieved if one repays all loans on time, maintains a good credit utilization ratio, has a good mix of secured and unsecured loans, and doesn’t take multiple loans at the same time. 
Therefore, if one’s credit score is between 750 to 900, it is a good indication that he/she follows healthy credit practices. Hence, lenders will easily provide loans to such borrowers at favourable terms and conditions.

Low Rates of Interest

Perhaps the most important criterion for borrowers, the rate of interest imposed will have an impact on their EMIs. If you have a high credit score, your lender will have faith in your repayment abilities and will therefore provide loans at lower interest rates.

High Loan Amount and Repayment Tenure

If you have a high credit score and you have proven your ability to repay a loan, you will be able to avail a higher loan amount along with a longer repayment term. A higher loan amount not only works to your advantage, but the longer repayment period will ensure that your monthly payments are not too high.
However, it is to be noted that longer repayment periods will result in a higher interest amount being paid over time.

Quick Approval

Once the lender is sure of your repayment abilities, there will not be any unnecessary delays in loan approvals. Therefore, you will be able to get a loan at your terms and conditions and get a loan quickly.

Conclusion

While it's possible to get approved for a personal loan with bad credit, the best personal loans typically require fair credit or better, and you'll want a score in the 700s to get favourable loan terms.

Before you apply for a personal loan, think carefully about your financial situation and whether a personal loan is right for you. Then, evaluate your creditworthiness to research your options based on what you learn.