Small Business Loan
A good credit score makes you credible for lenders offering small business loans in India. But what is a credit score and why is it important?
A credit score is a three-digit rating between 300-900, given to you by credit bureaus of India (CIBIL, Experian, etc) based on your credit history. Every time you use a credit tool, the transaction is recorded by the credit bureau. While timely payments improve your credit score, missing payments and defaulting on loans cause your credit score to plummet. It is a record of your credit history, indicative of your creditworthiness. Any score above 600 is considered good and helps you in receiving loans easily.
Benefits of a Good Credit Score for Business Loans
Better Credit Limits:
With a high credit score, your lender would have more trust in you and would view you as a credible investment. You can then ask for a higher loan amount and a lower interest rate. This happens because borrowers with good credit scores often end up paying their loans on time, satisfying their lenders in the long run.
If you have a good credit score, lenders would be more inclined towards giving you funds at low-interest rates. Lenders decide the interest rate on loans as per the borrower’s profile. A person with a low credit score would have to borrow a loan for a small business in India at high-interest rates, which would increase the total cost of the loan.
The requirement of loans and financial assistance can arise at any point in your life. If you maintain a high credit score, you can breathe easy knowing that lenders would be willing to loan you money as and when needed. If you pay off your existing loans on time and without any delays, you will build a high credit score automatically. Your future loans would depend upon the credit score that you build today.
Customizable Repayment Options:
Muthoot Capital offers customizable repayment options for borrowers who have high credit scores. People who are known to have paid off their loans on time and without any failures garner more perks. If you are one of them, you can choose the medium through which you wish to repay your loan. Your EMIs can be customized because of your high credit score. This could be of great value as preferred EMIs would give you the freedom to plan your finances as per your budget.
Also, Read- How To Get A Small Business Loan In India Easily?
In conclusion, a credit score is responsible for a lot of important elements while availing small business loans in India. As a borrower, you must aim to keep a high credit score, making you a preferred borrower for lenders. Avail of big loans at low-interest rates and enjoy a hassle-free loan process.