When you apply for a personal loan, lenders and financial institutions consider your credit score. If you are curious about how to get a loan with a credit score of 650, this article has the answers you need. While some lenders may grant personal loans with a 650 credit score, you might need to pay higher interest rates. To secure faster approvals and access larger loan amounts, you must improve your credit score before applying for a personal loan.
The credit solutions from Shriram Finance not only enhance your financial prospects but also help you boost your credit score. We will assist you in effectively managing your repayments and building a strong credit history. Our suite of loans includes business loans, personal loans, commercial vehicle loans, used car loans, two-wheeler loans, gold loans, etc. If you need a personal loan, apply here.
Credit Score for Personal Loans
If you are trying to get a loan with a 650 credit score, before sending your application for a personal loan to financial institutions, you must know how much a 650 credit score is worth. Let us dive into the world of credit scores and explore your options:
- Lenders utilise your credit score as a tool to assess your creditworthiness.
- A credit score of 650 is considered a fair score within the range of 300 and 900. It indicates a moderate risk to the lenders.
Factors Responsible for a Low Credit Score
Understanding the factors that led you to achieve a credit score of 650 can help you take steps to improve it. Some of the key factors that affect your credit score are mentioned below:
Payment History: Late payments or defaults can significantly lower your credit score.
Credit Utilisation: High credit card balances relative to your credit limit can negatively impact your score.
Credit History Length: A shorter credit history may result in a lower score.
Credit Mix: A lack of variety in credit types can also influence your score.
New Credit Applications: Multiple recent credit inquiries can hurt your credit scores.
How to Improve Your Credit Score of 650?
You can improve your credit score by being consistent in your efforts and keeping patience. Some key measures discussed below can be useful:
Pay Bills on Time: Consistently making on-time payments establishes a positive repayment history.
Reduce Credit Card Balances: Lowering your credit card balances can improve your credit utilisation ratio.
Maintain Old Credit Accounts: Keeping older credit accounts open can contribute positively to your score by extending your credit history.
Diversify Your Credit Mix: Responsible management of different types of credit can enhance your score.
Limit New Credit Applications: Avoid applying for multiple new credit accounts in a short timeframe, as it can potentially lower your scores.
How Does Credit Score Affect Personal Loan Applications?
Your credit score significantly influences your ability to secure a personal loan and other loan terms that you will receive from your lenders. Mentioned below are some of the major impacts of credit scores on personal loans:
Interest Rates: Higher credit scores lead to lower interest rates, reducing borrowing costs. In contrast, lower scores may result in higher rates.
Loan Approval: Good or excellent credit scores significantly improve the chances of loan approvals. On the other hand, lower scores may lead to the rejection of loan applications or require co-signers with good credit scores.
Loan Terms: Credit scores affect loan amounts and repayment history. Higher scores qualify for more extensive terms.
Overall Cost: Your credit score determines the total loan cost. Lower scores mean higher interest payments.
Options for Lower Scores: Specialised lenders provide loans to borrowers with lower credit scores but offer higher interest rates.
Getting Personal Loans with Low Credit Scores
While a 650 credit score may present some challenges, it is still possible to obtain a personal loan. Below are the options to secure personal loans with low credit scores:
Specialised Lenders: Look for lenders that specialise in providing personal loans to individuals with fair or poor scores. These lenders may have more flexible requirements.
Secured Personal Loans: In contrast to unsecured loans, consider secured personal loans, which require collaterals to apply for the loan. Collaterals provide additional security for the lender, substantially increasing the likelihood of loan approvals.
Co-Signer: Seek a co-signer with a higher credit score to strengthen your loan application. A co-signer essentially guarantees the loan and shares responsibility for repayment.
Conclusion
In conclusion, securing a loan with a 650 credit score is possible, though it may come with higher interest rates. Shriram Finance, a trusted partner in your journey for financial management, offers personal loans to individuals in this credit range.
Importantly, getting a loan with a credit score of 650 can help improve your credit history. By making timely payments and managing your loan responsibly, you can gradually boost your credit score. Take the first step towards financial empowerment with various loan options from Shriram Finance. If you need a gold loan, check the details and apply here.
Key Highlights
- While 650 is a good credit score for a home loan, it may affect your ability to secure a personal loan.
- Factors like repayment history, credit utilisation, and credit history length contribute to your credit score. Improving your score requires responsible financial behaviour and patience.
- Your credit score significantly influences the interest rate and other terms you receive on personal loans.
- Options like specialised lenders, unsecured loans, and co-signers are available for borrowers with lower credit scores.
FAQs
1. Can I apply for a loan with a 650 credit score?
You can apply for a personal loan with a 650 credit score. However, the terms offered may not be as favourable compared to higher credit scores.
2. Is 650 a good credit score?
A 650 credit score falls within the "fair" range. While it is not considered excellent, it is still in a range that qualifies you to apply for loans.
3. Can I get a ₹50,000 loan with a 650 credit score?
It is possible to get a ₹50,000 loan with a 650 credit score, but you may be offered higher interest rates and stricter loan terms compared to borrowers with higher scores.
4. What interest rate can I get with a 650 credit score?
Interest rates for personal loans with a 650 credit score may vary depending on the lender and other factors. Generally, the interest rates tend to be higher compared to the rates offered to individuals with excellent credit scores.
