Even if there is a variation, the score always goes from 0 to 1000, indicating whether the consumer represents a low, medium or high risk of default. But how much is a good score? What does it mean to have a high or low credit score ? Overall, it is divided into three groups:
- 0 to 300 points = low credit score : indicates a high risk of default.
- 300 to 700 points = average credit score: indicates an average risk of default.
- 700 to 1000 points = high credit score: indicates a low risk of default.
Which credit score is good for a loan?
Looking at this classification, it is easy to understand that the higher the credit score, the better for the consumer seeking a loan. If you have already looked for a loan, financing or new cards, it is likely that you have heard from your manager that your score was good or bad.
However, there is no exact score that guarantees consumers access to all these financial products. The score is not a law, but an indicator that companies use according to their own guidelines and in conjunction with other indicators.
A person can get a loan at one bank and be denied at another. Likewise, customers with the same score can have different answers at the same bank. Therefore, there is no set amount of credit score to get a maturity loan.
Overall, being above 700 points is considered an ideal situation. This indicates to the bank that the risk of default by this consumer is low (and the chance of receiving for the credit granted is greater), increasing the probability of getting better lower interest rates, good card limits, financing, etc.
Can the bank deny loan for low score?
It is important to consider that banks can decline a credit request based on the score. As the Central Bank of Brazil points out , financial institutions can establish their own criteria to determine their analyses. Precisely for this reason, the score will not always be decisive.
Other factors can weigh heavily on a credit rating. We will detail each of them further below. Be aware that it is possible to get a loan with a low score if you use these factors to your advantage. After all, the credit score is an indication of consumer behavior, but it is not a definition.
How to check credit score?
Curious to know your score after reading all this about how the credit score works and its importance in getting a loan? Just enter the websites of the credit bureaus, register and check your score.
Be aware, as some offer paid services, but there are free credit score consultation packages, such as on the Serasa and Boa Vista websites . In both, just enter your personal data, create a password and login to check your score.
5 types of loan for low score
You already know that it is possible to get a loan for low score. Now, we are going to tell you which types of credit are easiest to get with an unfavorable score. It is important to keep in mind that interest conditions, credit value and terms may not be so favorable.
Searching for institutions that grant these types of low-score loans can also be more difficult, but it’s worth it! The search is easier if you already know the modalities that will consider other strengths of your financial life. Check them out below!
- Loan with property guarantee
The secured loan is one of the most favorable modalities for consumers who have a low credit score. This is because this type of loan provides financial institutions with more evident security that they will receive back the amount granted: an asset in the name of the consumer.
In the case of a home loan, the situation is even more favorable if you are looking for higher value credits. This modality requires the client to offer a paid property as a guarantee of payment, with the asset being listed in a fiduciary alienation agreement. The credit is usually 60% to 70% of the property’s appraised value.
With the asset sold, the risk of default is minimal for the financial institution. Thus, the low credit score is no longer such a considerable point and the property becomes a greater security than the consumer’s financial history. Therefore, the secured loan of real estate also brings exclusive advantages such as low interest and long term for payment.
And best of all: you can continue using the property normally, without having to vacate or sell it to obtain the desired credit. Did you find it interesting? Click here and see how the secured loan works .
