Your credit score is like a financial report card that lenders check before approving any loan. This 3-digit number (ranging 300-900 in India) determines:
✔ Whether you get approved
✔ What interest rate you’ll pay
✔ How much you can borrow
At Today Finserv Consulting India, we help borrowers understand and improve their credit scores for better loan approval chances.
What is a Credit Score?
A credit score is a numerical representation of your creditworthiness based on:
- Payment history (35% weightage)
- Credit utilization (30% weightage)
- Credit age (15% weightage)
- Credit mix (10% weightage)
- New credit inquiries (10% weightage)
Credit Score Ranges in India
| Score Range | Rating | Loan Approval Chances |
|---|---|---|
| 750-900 | Excellent | Highest approval, lowest rates |
| 700-749 | Good | Easy approval, competitive rates |
| 650-699 | Fair | Approval likely but higher rates |
| 600-649 | Poor | Difficult approval |
| Below 600 | Bad | Very difficult to get loans |
How Credit Score Affects Loan Approval
1. Determines Your Eligibility
- Most banks require minimum 650 score for unsecured loans
- Government banks may accept scores as low as 600 with collateral
2. Impacts Interest Rates
Example: Personal Loan Interest Rates by Credit Score
| Credit Score | Interest Rate (p.a.) |
|---|---|
| 750+ | 10.5% – 12% |
| 700-749 | 13% – 15% |
| 650-699 | 16% – 18% |
| Below 650 | 20%+ or rejection |
*A difference of 100 points can cost you ₹50,000+ extra on a ₹5 lakh loan!*
3. Influences Loan Amount
- Higher scores = Larger loan amounts approved
- Low scores may only qualify for partial amounts
4. Affects Processing Time
- 750+ scores often get instant approvals
- Lower scores may require manual verification (slower process)
5. Decides Need for Collateral/Co-signer
- Poor scores may require:
- Security deposits
- Co-signers with good credit
Type-wise Credit Score Requirements
1. Personal Loans
✅ Minimum: 650 (some lenders at 600)
✅ Ideal: 750+ for best rates
2. Home Loans
✅ Minimum: 700 (preferred 750+)
✅ Longer terms = Stricter requirements
3. Car Loans
✅ Minimum: 650
✅ Secured nature = Slightly lenient
4. Credit Cards
✅ Minimum: 700 for premium cards
✅ 650+ for basic cards
How to Improve Your Credit Score for Loan Approval
1. Pay EMIs/Credit Bills on Time
- Set up auto-payments to avoid misses
2. Keep Credit Utilization Below 30%
- If limit = ₹1 lakh, don’t use more than ₹30,000
3. Maintain Healthy Credit Mix
- Combination of secured + unsecured loans
4. Limit New Credit Applications
- Multiple inquiries hurt your score
5. Correct Errors in Credit Report
- Dispute any inaccuracies with CIBIL/Experian
Special Cases: When Credit Score Isn’t Everything
1. Government/Secured Loans
- Schemes like PMAY may have relaxed norms
2. Relationship Banking
- Existing customers may get concessions
3. Collateral-Based Loans
- Strong assets can offset mediocre scores
How Today Finserv Can Help
- Credit Score Analysis – Identify improvement areas
- Loan Matching – Find lenders matching your profile
- Application Guidance – Present your case effectively
- Credit Repair Services – Dispute resolution & score boosting
Frequently Asked Questions
1. Can I get a loan with 600 credit score?
Possible but with higher interest or need for collateral/co-signer.
2. How quickly can I improve my credit score?
Significant improvements possible in 3-6 months with disciplined habits.
3. Do checking my own score affect it?
No, soft inquiries don’t impact scores.
4. Which credit score do Indian banks check?
Most use CIBIL, some check Experian or CRIF High Mark.
