Creditworthiness means the extent to which an individual or entity is considered fit for receiving financial assistance based on their history of paying back the money. The creditworthiness of a borrower is determined by its credit score. When a person is applying for a loan, the thing that can be an obstacle while getting a loan is the creditworthiness.
CIBIL (Credit Information Bureau of India Limited) provides a credit report with the score in it to the borrowers. The range of this score is from 300-900. The ideal CIBIL score that institutions also prefer is 750 or above. To apply for a certain type of loan, the borrowers need to have a credit score specified in the loan policy. The banks and NBFCs (Non-Banking Financial Companies) are very strict regarding their requirement of a certain level of credit score.
All types of loans require some level of credit score and if your CIBIL is below the required level, chances are you may not get approved for a loan. A gold loan is given against the gold you pledge with the bank. All you need is gold as collateral and KYC documents to avail of the facility of a gold loan.
While sanctioning gold loans the CIBIL score is not considered and that is because usually when any other form of loan is given the amount to be sanctioned depends on the repayment capacity and the credit history of the customer but in the case of gold loan the amount is decided based on the market value of the gold. When gold is provided as collateral, the lender's risk is reduced and they get the security they need before they grant the loan.
A gold loan is the only form of loan that is processed without taking into consideration the creditworthiness of the borrower. The borrower can opt for a policy of his/her choice with the best gold loan interest rate and gold loan per gram rate. This type of loan is available in the market with the sole aim of helping the borrowers by providing quick funds.
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