How does my credit history impact the interest rate?
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Credit history directly determines your interest rate through risk-based pricing. Rate structure by score: 800-900 (Excellent): 9.99-11% p.a. - Best rates, pre-approved offers, rate negotiation possible; 750-799 (Very Good): 11-13% p.a. - Standard good rates, quick approval; 700-749 (Good): 13-16% p.a. - Average rates, standard processing; 650-699 (Fair): 16-20% p.a. - Higher rates, additional scrutiny; 600-649 (Poor): 20-24% p.a. - High rates, limited options; Below 600: 24-36% p.a. - Very high rates or rejection. Impact example: For ₹10 lakh loan over 5 years - At 10% p.a.: EMI ₹21,247, Total interest ₹2.75 lakhs. At 18% p.a.: EMI ₹25,393, Total interest ₹5.24 lakhs. Difference: ₹2.49 lakhs more in interest. A 50-point CIBIL improvement can save lakhs over loan tenure. Additionally, better scores get: fee waivers, higher loan amounts, better negotiation power.
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Your credit score directly affects your interest rate. Excellent scores (800+) get rates around 10-12%, while lower scores (650-700) face rates of 16-20% or higher. On a ₹10 lakh loan, this difference can mean paying ₹2-3 lakhs more in total interest over the loan period.
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