{"id":95593,"date":"2024-07-16T13:35:39","date_gmt":"2024-07-16T13:35:39","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/07\/16\/avoid-higher-emis-interest-rates-planning-to-take-a-loan-heres-how-your-credit-score-impacts-loan-rate-emis-times-of-india\/"},"modified":"2024-07-16T13:35:39","modified_gmt":"2024-07-16T13:35:39","slug":"avoid-higher-emis-interest-rates-planning-to-take-a-loan-heres-how-your-credit-score-impacts-loan-rate-emis-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/07\/16\/avoid-higher-emis-interest-rates-planning-to-take-a-loan-heres-how-your-credit-score-impacts-loan-rate-emis-times-of-india\/","title":{"rendered":"Avoid higher EMIs, interest rates! Planning to take a loan? Here’s how your credit score impacts loan rate, EMIs – Times of India"},"content":{"rendered":"
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Are you planning to take a loan? It\u2019s important to know that your credit score, also commonly known as the CIBIL score, has an impact on the interest rate that banks charge you for the loan. The higher your credit score, the more likely it is that banks and financial institutions will charge you a lower interest rate for loans.
In a recent post on LinkedIn, Adhil Shetty explained the importance of maintaining a CIBIL (credit) score of 750 plus.Using a table detailing the EMI and interest rates offered corresponding to each CIBIL score as reference, the BankBazaar.com CEO described the inverse relation between credit scores and interest.
First-time loan-takers, Shetty warned, will have to pay interest rates similar to those with credit scores of 750 or below. The highest interest rate (9.65%), based on BankBazaar\u2019s estimates, is charged from creditors whose scores fall in the 500-649 bracket.
The lowest advertised interest rate (8.50%), on the other hand, is charged from those with extremely high credit scores. The interest rate of 9.15% is charged from those with the comparatively attainable credit score of 750, or above.<\/p>\n
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How Your Credit Score Shapes Your Loan Interest Rate<\/p>\n<\/div>\n<\/div>\n

Effectively, this means that borrowers with a 600 CIBIL score and a 750 CIBIL score will be paying an EMI of Rs 903 and Rs 934 (on a loan of Rs 1 lakh payable over 20 years), respectively. This illustrates the benefits of maintaining a high score.
\u201cYour credit score impacts your loan interest rate. In a big-ticket loan such as a home loan, a sizeable interest difference due to a good score can help you save a ton of money. But with a very low score, you may not even get a loan from a bank\u2014even at a high interest rate. Hence you should try to be above 750 at all time,\u201d says Adhil Shetty.
The credit score is a numerical representation of an individual’s creditworthiness. The credit score ranges from 300 to 900, with higher scores indicating better creditworthiness. A score above 750 is generally considered good, making it easier for individuals to get loans and credit cards with favourable terms.
Also Check | Credit score tips: 7 ways to improve your CIBIL score<\/a>
It is therefore important to be cognizant of the factors that influence one\u2019s score, some of which are detailed below.<\/p>\n

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  • Payment History: Outstanding balances, timely repayment, duration of credit-borrowing (calculated from opening date of oldest credit account), and credit card transactions are counted in the same. <\/li>\n
  • Credit Utilization: This refers to the ratio of the credit used to the total credit limit. Lower utilization indicates better credit management.<\/li>\n
  • Number of new accounts opened and closed – Opening a new account reduces the average age of your credit accounts, which can negatively impact your credit score. <\/li>\n
  • Credit Mix: A healthy mix of secured (like home loans) and unsecured (like credit cards) credit is likely to boost up your score.<\/li>\n<\/ul>\n<\/div>\n

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