A credit score of 680 is considered fair. It is not bad but still makes lenders tread with caution with your car loan application. A 680 generally indicates that your credit history is good, but you have not had enough credit history, which makes your credit score lower.
Lenders may also want to see your payment history to ensure you can afford the monthly amount. This step can make the difference between getting approved for a loan and getting turned down.
Increased lending risk is not a bad thing when you are building a strong credit score. However, a higher risk score may affect your opportunity to get car finance, which can make buying a car challenging.
Credit scores are changing the lending scene in India. With the phenomenal rise in NPAs, lenders do not want to risk their money on borrowers with less than stellar credibility. It is making them cautious about lending on credit cards, auto loans and personal loans.
Lenders also want to ensure that the risk they are taking is aligned with the borrower’s ability to repay. This is making them more selective and cautious, which is good for anyone looking to buy a new car, and maybe save a little money in the process.
Today, a credit score between 650 and 750 has become a significant prerequisite for getting a loan, and not only for car loans. Even for home loans, if your score is below this threshold, you may have to make an uphill battle to get the loan and may have to work with higher interest rates.
Also Read: What is a good CIBIL™ Score for Car Loan in India