Planning to take a personal loan? Then your credit score is more important than you think. It's one of the key factors that lenders use to decide whether to approve your loan — and more importantly, what interest rate to offer you.
In this blog, we’ll explain how your credit score directly impacts personal loan interest rates and what you can do to improve it.
What Is a Credit Score?
A credit score is a 3-digit number (usually between 300 and 900) that reflects your credit history. It’s issued by credit bureaus like CIBIL, Experian, or Equifax.
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A score above 750 is considered excellent
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A score between 650–749 is good to average
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Below 650 is considered risky by lenders
Why Does It Affect Personal Loan Interest Rates?
Lenders view your credit score as a measure of how reliable you are in repaying loans. The higher your score, the lower the risk for the bank — so they’re willing to offer you lower personal loan interest rates.
How to Improve Your Credit Score
Want better rates? Here’s how to boost your credit score:
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Pay EMIs and credit card bills on time
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Keep your credit utilization below 30%
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Avoid applying for multiple loans at once
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Maintain a good credit mix (secured + unsecured loans)
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Check your credit report for errors
Real Example
Ravi and Amit applied for a ₹3 lakh personal loan.
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Ravi had a credit score of 790 → got 11% interest rate
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Amit had a score of 640 → got 19% interest rate
Over a 3-year tenure, Ravi paid ₹28,000 less in interest than Amit — just because of his better credit score!
Final Thoughts
Your credit score plays a major role in determining personal loan interest rates. A higher score = lower interest = more savings.
Need Help?
At Fundcera, we help you find the best personal loan offers based on your credit profile — with the lowest interest rates and fastest approval.
