How important is a credit score in case of unsecured loans?

An Unsecured loans, by its very definition, is a loan without security, based entirely on the character and capacity of the borrower to repay. The capacity is judged by the credit score of the borrower. Borrowers are not required to pledge his home as security in the case of an unsecured personal loan deal. So, the lender assures himself by valuating the repayment history of the borrower.

Credit score is extremely important for an unsecured loan. As there is no gaurantee for the lender in the form of anysecurity of assets, lenders are authorised to charge high interest rates for unsecured loans .

therefore, a good credit score can translate into low interest rates for the borrower.