13 October 2017

Unsecured Personal Loans: Where Credit Scores Really Matter

With the loan market expanding at a never before rate, customers have more choice before going in for any funding solution. For the net savvy population, online lending has become a popular way of seeking loans. Firstly, it doesn?t require the loan seeker to go and meet the bank officer directly. Secondly, most online brokers offer excellent customer service. As there is no other direct point of contact between the client and the marketers, prompt client service is the only way to ensure satisfying point-of-contact.

If the borrower is opting for unsecured personal loans, then his credit score becomes very important. There is a simple rationale behind it- these loans are not secured against any collateral. In other words, there is no security for the lender that he will get his money back on time. Therefore, he will charge a high interest rate to safeguard his investment.

A credit score becomes important while applying for unsecured personal loans because it is the meter by which the lender can gauge the repaying capacity of the borrower. But, to the woe of the customers, there is no fixed credit score system that is followed by lenders. Each bank or financial institutions have their own method of determining a person's credit health. Some may take into account his present disposable salary and increments in the near future before sanctioning a loan.

Before applying for unsecured personal loans, it is better to have a credit check done through one of the credit bureaus like Experian or Equifax. Do not apply for loans randomly. Give some time for the lender to respond to your request. Only if your application is rejected, apply with another finance site. Each lender will do a credit check on you before going ahead with your loan request. If too many checks are done on your profile, it may have a bad effect on your credit health.