Understanding credit scores for a two-wheeler loan application should be a top priority specifically, your credit score is important for a two-wheeler loan application as part of the blocking-off decisions during the approval process. This article provides an overview of the importance of having good credit scores for two-wheeler financing.
Understanding credit score and their importance
A credit score is a numerical representation of how reliable a borrower is based on their credit history. Credit scores in India are rated between 300 – 900 by the credit bureau. All of this will have an important impact on loan character and possibility of obtaining the loan.
What constitutes a good credit score for a two wheeler loan?
- More than 750: Applicants bearing scores higher than 750 have a very high chance of receiving a loan in an expedited manner and may receive advantageous terms and interest rates.
- 701-750: This range is considered good scores and typically meet the minimum requirements for approval for a loan; however, they are unlikely to provide the same acceptable terms.
- 650 and 700: Even though the approval may still occur, lenders may apply stricter criteria, including higher interest rates or down payment.
- Below 650: Scores below 650 are considered poor scores and make obtaining a loan next to impossible.
Impact of low credit score on loan terms
A two-wheeler loan may be negatively impacted by a lower credit score in a number of different ways:
In conclusion, the likelihood of you being granted a two-wheeler loan with favourable terms can be significantly enhanced with a high credit score. While you may be able to obtain a loan with a score of 750 or more, a person with a lower score can still build their creditworthiness and enter into financial plans that will benefit them.
Disclaimer: Mint has a tie-up with fin-techs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
