3 Vital Factors That Affect Your Credit Rating - Loan Trivia


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Monday 22 November 2021

3 Vital Factors That Affect Your Credit Rating


Credit rating is probably the most critical consideration associated with personal loans. Credit rating is the analysis of your creditworthiness which decides your repayment ability and risks of default. Lenders generally have a minimum cibil score for personal loan as a primary requirement for personal loan applications. 

But what factors affect your credit rating? Let us check out a few of these.

What is a Credit Rating?

A CIBIL rating is given to a borrower on the basis of his past records and present debts. A good CIBIL score increases your chances of loan approval. The better the repayment ability of a person, the higher is the credit rating. 

The CIBIL Score is a significant component of credit rating. Most lenders require a CIBIL score of 750 or more to approve personal loans. This will help you get lower EMIs and interest rates. It is also important to understand CIBIL Score Vs Credit Score to know how they affect your loan status. 

Factors Affecting Credit Rating

While there are lenders offering instant loans without CIBIL scores, most others consider credit rating for this insecure loan. Here are some factors that influence your credit rating. 

Credit Utilization

Using a big portion of your available credit affects your credit rating. It suggests that you depend on credits to manage your finances. So, the focus should be to lower your credit utilization.

Irresponsible Repayments

The most important factor affecting your credit score is how you repay the loans. If you could repay on time in the past, you can expect a good credit rating. Defaulting your loans or failing to pay EMIs on time reduces your credit score. 

Inability to Repay Outstanding Debts

Not paying off your existing loans can harm your credit rating to a great extent. Any outstanding debts would badly influence your CIBIL score, so try clearing off any dues before applying for a personal loan

Now that you know about the factors affecting credit rating, you can aim for a maximum CIBIL score to get instant approval for your personal loans with lower interest rates and EMI amounts. 

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