Credit scores play a pivotal role in the current financial market. As financial inclusion is happening at a rapid stage, this means a lot of people from different backgrounds are getting the banking service for the first time.
It means the banks and the NBFCs are getting new customers about whom they don’t have any financial records or history. Then, to check the credibility of the individual, one needs to have a good credit score, which verifies that the person pays their debt on time and has a good credit history.
Depending on those scenarios, a lot of personal loan agents suggest that customers keep their credit score maintained so that they can get financial benefits from mainstream institutions and can get the benefit of financial inclusion.
In this blog, we will explore the significance of credit scores and how they provide valuable offers that can be beneficial for the customer.
1. Credit Scores and Personal Loans
It is one of the main connections that a person can have with their habit of keeping a good credit score. A good credit score helps an individual get personal loans at an affordable rate of interest.
A bank can assess the creditworthiness of a person by checking their credit score and can then decide by performing their internal check. They can offer the person a suitable loan amount and will also give them the benefits of a low-interest rate.
The interest rate is much higher in the personal loan category as it doesn’t have any collateral, and due to that reason, the interest rate is much higher. It acts as a double-edged sword where the default rate is higher, and it gets tougher for the bank to recover such loans.
But once the customer starts paying the interest amount of the personal loan, then in that time, the bank gets to earn much more and is one of the most profitable segments in its product portfolio.
2. Minimum Credit Score Requirements
Typical minimum credit score requirement varies from lender to lender, and through that, the banks and the NBFCs can assess their customers, which helps them scrutinize the customers. Some of the safe lenders prefer much higher scores as they keep their rate of interest low, and due to that, they only choose those customers whom the company can be assured of.
However, certain banking and lending institutions help people from the lower strata of income by giving them personal loans. In those situations, the requirement of keeping a very high credit score is not mandatory, but the banks set up a high interest rate on the loan amount.
3. Choosing the Right Lender
It is also essential that you choose the right lender. For that, you can easily identify the lenders who are offering many lenient terms, and due to that, they can easily pay the interest amount along with the principal amount.
A DSA agent can help the customers find a loan option that will have some other benefits that are essential for the needs of the customers. It’s always better to speak to an agent before applying for a loan as they can show you all the available options you have, and then you can choose. However, the entire set of options depends on your credit score, and based on that, you can get suitable options.
It’s always best to choose an agent who has done their SBI DSA registration and a credible agent with knowledge of the entire banking process. It will help you to trust the agent and can rely on their information.
4. Rebuilding Credit After a Loan
Once you get the loan, it’s still a great opportunity to maintain your credit score. It is the role of the customer to pay the interest amount on time each month as it can help them rebuild their credit score, which will be beneficial for them in the future.
Through these simple 4 steps, one can maintain their credit score and can stay inclusive with mainstream financial products and banking services.
