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A CIBIL score is an important factor that measures your creditworthiness. It is taken into consideration by lenders when you apply for a home loan, personal loan, and other credit products. A personal loan is a type of unsecured loan that has a short- or medium-term period. It can be taken for several reasons such as a for a vacation, paying off debt, medical expenses, and wedding expenses, among others.
As a personal loan is unsecured in nature, you don’t need to provide any collateral to the lender for availing it. However, lenders need to check your credit health and make sure you have the ability to repay the borrowed sum.
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 has a range between 300 and 900. You should ideally have a score that is closer to 900 as it helps you get better deals on loans and credit cards. Generally, a CIBIL score of 750 and above is considered as ideal by majority of lenders. You can get a personal loan with a CIBIL of 750 and above. As per CIBIL data (as reported by Economic Times), 80% of loans get approved if the score is more than 750.
Lenders need to be sure that you have the ability to repay the borrowed sum before they approve your loan application. Your credit score helps assess your risk of default. If you have a high score it suggests you have been a responsible borrower and paid your credit card bills and EMIs on time. A lower score increases your risk for defaulting on the loan.
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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It is important to learn about your credit health before applying for a personal loan. You should check CIBIL score as it will give you an idea of where you stand in terms of your credit history and repayment. If your CIBIL score is low, you can take time to work on it and gradually increase it by taking the right measures.
You can visit the official website of CIBIL and claim your free report if you haven’t already this year. The Reserve Bank of India (RBI) made it mandatory for all the credit bureaus in the country to offer one credit report for free per calendar year. In addition, you can also buy your CIBIL report for a one month, six months, and one year.
Once you have decided to take a personal loan, you will need to look for lenders that are offering good deals on their loans. It is better to browse for deals and select one that is most favourable to you. As a result of high competition, many banks are offering competitive interest rates on personal loans. Look out for the best deal that will offer you maximum benefits in terms of interest rate and tenure and fringe benefits such as processing fee waiver.
After shortlisting lenders that are offering the loan suitable to your needs, you should apply only with a few lenders. You should be careful and avoid making multiple applications at the same time as this will trigger multiple hard inquiries. Several hard inquiries will have a negative effect on your CIBIL score.
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.
Your CIBIL score works like a report card for your credit status. It is calculated after taking into consideration several factors like credit history, repayment behaviour, and type of credit, among others. A long credit history makes it easier for lenders to take a sound decision about offering you a loan. However, if you don’t have a CIBIL score, the lenders will take into consideration other factors such as age, income, and job stability to evaluate your creditworthiness.
Having a CIBIL score makes it easier for you to get access to credit products. Here are a couple of ways in which you can start working on building a credit history:
It is important to note that lenders also look at other factors when approving or rejecting your personal loan application. A good CIBIL score alone isn’t enough to get approval on your loan.
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
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.
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.
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 |
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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
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.
