Your wedding day is a momentous occasion that marks the beginning of a new chapter in your life. As you plan for this special day, financial considerations often play a significant role. Many couples turn to wedding loans to cover the costs associated with the venue, catering, attire, and more. However, one crucial factor that can influence your ability to secure a wedding loan is your credit score.
Eligibility Criteria for Personal loan for wedding
1) The applicant’s age at the time of loan application must be 21 years.
2) At least two years of work experience is required, with at least two months of consistency with the current company.
3) The candidate must earn at least ₹30,000 in net monthly income.
4) The applicant must be employed full-time by a corporation, LLP, private or public limited company, or other similar organisation.
5) Only Indian citizens are eligible for a personal loan.
6) Lenders normally require a minimum credit score of 700 or higher in order to approve a borrower for a personal loan.
Understanding credit score
A credit score is a metric that measures your creditworthiness. This score is used by lenders to determine the risk of lending you money. Payment history, credit utilisation, length of credit history, types of credit in use, and new credit accounts all contribute to your credit score.
Impact of credit score on interest rates
When applying for a wedding loan, your credit score plays an important role in establishing the interest rate given. Although There are other factors that impact the interest rate. Individuals with higher credit scores display financial responsibility, which is why banks and NBFCs generally do not hesitate to provide loans to them. Many lenders even offer lower interest rates to applicants for personal loans with higher credit scores.
Loan Approval
Your credit score is an important consideration for lenders when determining your eligibility for a wedding loan. A better credit score usually results in faster loan approval, whereas a lower score may result in additional delay or even refusal of the loan application.
Loan Amount
Your credit score, in addition to other factors, such as your income, age etc., may influence the amount of money you can borrow. Lenders may be more willing to provide larger loan amounts to those with an excellent credit history because they believe in their ability to repay. Those with poorer credit ratings, on the other hand, may face loan limits.
Improving your credit score
If your credit score is less than the eligibility requirement, there are steps you can take to improve it before applying for a wedding loan:
1) Check your credit report
Obtain a copy of your credit report to identify any errors or discrepancies. Dispute any inaccuracies and get them corrected to ensure an accurate representation of your credit history.
2) You must pay your bills promptly
The most important way in which one can improve their credit score is by paying their bills on time. Late payments often result in a negative impact on the applicant’s credit score and, consequently, their creditworthiness.
3) Avoid getting new credit accounts
Multiple for multiple credits in a short period of time can affect your credit score. To avoid negative consequences, limit credit applications.
Conclusion
Don’t forget the importance of your credit score in obtaining a wedding loan as you embark on the exciting path of organising your dream wedding. Understanding how your credit score affects loan acceptance, interest rates, and loan amount allows you to make more informed financial decisions. You can increase your chances of obtaining a wedding loan with advantageous terms by taking proactive actions to improve your credit score.
