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If you have emergent expenses that you don’t have funds for, you may to need to take a personal loan to meet those obligations. Personal loans can be availed quickly for many purposes. You can even take a personal loan for reasons such as refurbishing your house or going on a vacation. The best part about a personal loan is that there is no restriction on what you can use the borrowed funds for, as long as it isn’t in violation of any law.
Once the decision to take a personal loan has been made, the next step is to apply for a personal loan. When you approach a bank to take the loan, you will have to fulfil certain eligibility criteria which could range from a minimum age of 21 years to being salaried with a specific minimum monthly income.
However, apart from the general eligibility criteria you that you will be required to fulfill, you will also need to have a good CIBIL score for your personal loan application to be approved.
A CIBIL score is a number assigned to each person representing his/her creditworthiness. It is this number that plays a major role when banks decide whether a personal loan application should be approved or not. It receives information from banks and other financial institutions about the financial behavior of their customers and aggregates this information to produce a score or number which to indicate customers’ creditworthiness.
The minimum CIBIL score for a personal loan is generally 750. Anything above this would mean that the applicant is creditworthy and applications are processed without hassle. In general credit scores range from 300 to 900; 300 being on the lower end of the range and 900 on the higher end.
A good CIBIL score is one of the main requirements for a personal loan because personal loans are essentially unsecured loans which makes them more risky for banks. A good credit score indicates that the borrower is responsible when it comes to repaying their loans and credit cards.
There are many factors that affect credit scores, either positively or negatively.
Your Credit Score plays a significant role to play in the approval of your loan application. Let's check your score for free in less than 3 minutes and understand its powers.
When applying for a loan, your Credit Score is as important as your employment history, salary, and other eligibility factors. Make sure your score is at least above 750. 800 is a great number!
One of the parameters for a loan approval is the repayment history of the applicant. How do they find it? By checking your Credit Score. Good repayment history = good Credit Score.
This may be possible, but be prepared for a longer processing time as banks will put in some additional checks. Moreover, you might not always get the best deal.
Sometimes errors can make their way into a spotless credit report and mar your lovely Credit Score. Give your report a glance before submitting your loan application to rule this out.
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While you may think that just meeting the criteria of the age, employer and monthly salary entitles you to a personal loan, the fact is that your credit rating is key to your application being accepted. Here are some things you should do when applying for a personal loan.
Whenever you are applying for a loan, the first thing the lender does is checks your eligibility and if you do meet the eligibility criteria, he goes on to look at your credit score and based on that will he decide if the loan has to be given to you or not. If your credit score is low, there is a greater chance that your loan application might be rejected or you might get the loan at a very high interest rate. But, if your credit score is high, you will get a loan easily and you will also be in a position to bargain and set your own terms and conditions.
The most important parameter that one must follow is that they must ensure that their credit score is high at all times. The following are the ways you can follow to keep a high credit score:
Always remember the closer you are to the higher limit of your credit score, you are in a better position to negotiate the interest rate and the terms and conditions provided you meet all the other eligibility criteria.
CIBIL has provided for individuals to get their credit reports online. To apply for your credit score, just follow the following steps.
Once you have completed all the formalities and made the relevant payments, CIBIL will get in touch with you and provide you with the CIBIL Score.
There may be times when credit scores make for grim reading. If your credit score is lower than expected, there are steps that can be taken to improve it.
It may seem impossible but it happens. There are people who have never availed credit in any form and so don’t have a credit history. These include students, those who are at the start of their careers or those who have never taken a loan or a credit card.
If such a situation does crop up then getting a personal loan becomes very difficult. To get a credit history going, the best things to do are:
There may be some banks who would be willing to offer personal loans even without a credit score however, such a facility is provided at the banks discretion and may not be available all the time or with every bank.
A simple thing like a CIBIL score is all that could stand between you and your bank while availing a personal loan. Contrary to popular belief, it is not difficult to maintain a good CIBIL score. All you have to do is be responsible with your money and manage your credit cards and loans properly.
Know here: How to improve your CIBIL Credit Score
Member banks of credit information agency, CIBIL, stipulate credit scores as part of their loan eligibility criteria. A good credit rating gets you the best rates on unsecured loans. Do you know CIBIL Score for Axis Bank Personal Loan
If you need funds quickly, ICICI Bank is the place to go. Hassle-free disbursal, attractive interest rates and flexible repayment options all form part of the bank’s loan offerings. Do you have the right CIBIL Score for ICICI Bank Personal Loan
HDFC Bank is the preferred banking partner of thousands of loan seekers all across the country. If you want to a part of its personal loan community, you will need to have the required CIBIL Score for HDFC Bank Personal Loan
Q. What is the minimum CIBIL score required for personal loan processing?
Personal loans are granted by different banks based on different types of criteria. Most banks favor customers with a 700+ CIBIL score. However, in case of debt consolidation and balance transfer requests, banks may lower their CIBIL score criteria while compensating it with the interest charged from customer.
Q. Can I apply for personal loan without having a CIBIL score?
In case you do not have a CIBIL score then banks will be outright reluctant to entertain your personal loan request. For such customers the only options that remain would be to avail loan from a cooperative bank or a private lender or from some family member or friend. However, it is always advisable to build up a good credit score so that you do not need to go to private lenders and cooperative banks which do not guarantee any safety of your money. Customers with no credit score can also secure loans against any asset like gold jewelry or property.
Q. How to apply for personal loan if I have a low CIBIL score?
In case of low CIBIL score either customers can wait and improve their score before applying for credit or they can avail personal loans at a much higher rate of interest. However, the former is a much better choice than getting caught in the vicious circle of large amount of debt.
| CIBIL score looks good? Apply and choose between best Personal Loans in India |
If your loan application has been rejected in the past, it could be due to your low credit score. In order to get a personal, you should have a high credit score. Banks and non-banking finance companies (NBFC) generally consider a credit score of 750 and above as ideal.
What is a credit score
A credit score is a 3 digit number between 300-900 that represents your creditworthiness. A higher CIBIL score suggests good credit history and responsible repayment behavior. It also increases your chances for loan approval as banks and NBFC will believe that you have the ability to repay the loan.
Why is credit score important for loan
If you have a higher credit score, lenders will consider you as a responsible debtor and approve your loan or credit card application. Banks look at your credit score when they are determining your eligibility to before granting you loans.
Ranges of credit score
0 or -1: If you have no credit history, your credit score is 0. This is the right time to start building your credit history by getting a secured credit card.
350 – 550: A score in this range is considered as poor and you need to pull up your sock to work on increasing it. A poor credit score suggests, you have been you have been defaulting on payments. The chances of getting the approval of loan and credit card application is minimal in case your credit score falls in this range.
550 – 650: If your cibil score in somewhere between this range, you are in a position to get a loan or credit card. This indicates you are fairly regular with your payments and can be trusted with new loans and cards.
650 – 750: This is an ideal score and you may easily get credit without facing too many problems. Just continue paying debts on time and you will keep maintaining your credit score. should you stick to your current habits, you could reach the best CIBIL scores too.
750 – 900: This is the best range to get instant approvals on your credit card or loan application. You are This indicates you are regular with credit payments.
How to improve your credit score
• Limit Credit Usage: It is advised to not exhaust your entire credit limit and not spend over 50% of your credit card limit.
• Make timely payments: Make sure to make all the bills and dues on time and avoid any type of delays in order to maintain a good credit score.
• Review your credit report: In addition to CIBIL Score, it is advised to check your credit report as it might have errors. It is better to review your credit report regularly.
• Credit Utilization – It is another major factor that is considered while calculating the credit score. The amount of credit that is available to you versus how much of it you are using shows your dependency on credit money. It is advisable that people keep their credit utilization below 30%. So, if you have multiple credit cards, keep a check on how much money you are using on credit. Also, try to find a credit card issuer who will accept multiple payments in a month.
24 July 2018
