Loans help to get ease in finance and it’s really helpful for many. People consider Loans for various needs. Some need a loan to buy a house, someone needs an auto loan to get a car, and some people need to fulfill their need by getting a personal loan and others get a business loan to boost up their business.
Loan helps every type of person and eases them to fulfill their needs.
But a loan is not so easy to get. There is a way for lenders to easily find out your past credit records. This can easily determine your eligibility criteria for getting a loan. People who are looking to avail one for them, can visit website for rapid service.
Your credit score or CIBIL score is a numerical figure ranging from 300 to 900 which determines your past credit records and how good you are at dealing with credit. The better credit the more chances for loan approval.
How is Credit score Calculated?
Credit score is calculated from certain things which I will mention below
- Your current debt
- Past Payments
- Past loans
Your credit score is based on these three points that tells the lender that you are in any debt at the moment. It also is given on the records of your past billings. If you have been paying bills on time then your credit score might be good. It also counts your past loan payments and etc.
The Minimum Credit Score for Loans
The minimum credit score depends on the type of Loan you wanna take. Either it is a business loan, a personal loan or other loans. But on average all of these Loans require a minimum of anywhere from 650 to 700.
Well if you got higher than that you will have very good experience when taking a loan. And on the other hand you definitely need to increase your credit score if you have below 650 or so.
Well now talk about what type of Loan requires how much credit score.
Personal Loan
A personal loan is a loan that you take from a lender for your purpose. In a personal loan there is no need to put anything as a collateral like in a home loan. I would recommend you to have at least more than a 650+ credit score to get good interest rates and find lenders easily.
Auto Loans
Auto Loan is a loan that you take to buy an automobile. This is a really common Loan and many people take auto loans to get funds for buying their favourite car.
According to this site, Auto Loans require a minimum of 670+ credit score to get a better interest rate and a large variety of lenders.
Home Loan
A home loan is a loan that one takes to buy a new house or an apartment to live in. This requires a little less than the other loans as in this loan the house you need to buy is used as a collateral.
The minimum credit score to get a home loan with good interest rates is around 620 or more.
Business Loan
A business loan is a loan that you take from the lender to boost up your business in the way you want. These Loans require a credit score of around 680 to 750. This credit score will help you in finding more lenders and better interest rates.
Conclusion
In this article I talked about the minimum credit score requirements for different types of loan and how the credit score is calculated. I hope you know have a better understanding of how much credit score you should have before applying for a loan
