This is just a brief overview of what a 590 credit score means. it is important to understand that what can you get with 590 credit score before applying for any loan or Credit Card.
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A credit score is a three-digit numerical representation of your credit worthiness. The higher the score, the better your reputation as a borrower. Hence, your chances of securing a credit will increase significantly.
Thus, when it comes to student loan credit score, banks and other financial institutions typically look for a healthy credit score of 700 points or above. If you are still confused about the way credit scores work, read through the following sections.
As mentioned above, 700 is an ideal credit score that most banks and financial institutions prefer. Thus, if your credit score is lower than this, you should take some steps to increase it in due time.
This score typically ranges between 300 and 900 and the higher the point, the most creditworthy a financial institution considers you. For instance, a lender would be more eager to approve a student loan for a borrower with a credit score of 800 than a borrower with a 650 score.
That said, you can still obtain a student loan with a low credit score. However, in that case, the terms of the credit will be more stringent.
Since an education loan is a credit instrument, it affects your credit score. Similar to other loans, such as personal loans, car loans or home loans, a delayed payment can lead to a decreased credit score.
Typically, education loans come with a moratorium period. Thus, the repayment starts a year after completion of the course or 6 months after you bag a job. You should start repaying your loan as soon as you complete your course to avoid defaulting. For a clear estimation of monthly EMIs, you can refer to an online education loan EMI calculator.
Your credit score plays the most crucial role in deciding whether you are eligible to obtain a student loan or not. Moreover, student loan credit score also affects the interest rate on the borrowed amount. Most applicants with a healthy credit score get loan approval in the UAE quite easily. However, individuals with a poor credit score would likely have to abide by stringent parameters and repay the loan at a much higher interest rate.
That said, if you maintain a good credit score, you can also negotiate with the lender regarding the interest rate offered on loan.
Meeting the student loan credit score is one of the most important eligibility parameters to help you secure the credit. Hence, it is crucial for you to take measures to improve it. Mentioned below are a few things you can consider to maintain a healthy credit score:
The easiest way to increase or maintain your credit score is by paying your current dues on time. This will include credit card bills, current EMIs and any other financial obligations. As you keep repaying them, your credit history will reflect that you have been a responsible debtor.
If you have obtained different types of credit instruments and manage them efficiently, your student loan credit score can rise significantly. Having a diverse mix of credit instruments can help you improve your credit score. The reason is that it shows that you can handle different types of loans without any hassle.
When you apply for a loan, the lender submits a query with the respective credit bureaus. These queries are regarded as hard queries and multiple inquiries of this sort will have an adverse effect on your credit score. So, it is only ideal to avoid making more than one loan application at once.
With a healthy student loan credit score, the possibility of availing of an education loan becomes higher. Further, you may also benefit from a lowered interest rate, making the repayments budget-friendly.