CIBIL™ Score for Personal Loan

What should be the minimum CIBIL™ score for a personal loan?

The minimum CIBIL™ Score for a personal loan in India is 750. The CIBIL™ Score has a great role to play in ascertaining your eligibility for a personal loan, the interest rate, loan amount and tenure. Having a score of 750 and above entails you to better personal loan terms and the amount sanctioned.

The Role of CIBIL™ Score in Getting a Personal Loan

Loans, whether a personal loan, business loan or any other kinds of loan are required at some point to meet our financial contingencies. A personal loan is an unsecured loan that is normally taken for a short-term or medium-term period for meeting various financial needs like marriage, education, medical expenses etc.

When granting any loan, including personal loan, CIBIL™ score is a key factor taken into consideration by lenders for approving such a loan, to measure your creditworthiness and potential debt repaying capacity. The general eligibility criteria for a personal loan coupled with a good CIBIL™ score ensures that you can get your personal loan approved easily and hassle-free.

Additional Reading: Personal Loan For Low Credit Score

Why CIBIL™ score is considered significant while getting a personal loan?

A personal loan, being an unsecured loan, comes without any collateral but your credit health is very important for lenders to ensure you will not default on loan repayments. A personal loan gets approved only after careful scrutiny of your credit history by the lenders.

As such, the CIBIL™ score provided by TransUnion CIBIL™ Limited (CIBIL™), one of the key authorized credit bureaus in India, is a very vital consideration for lenders in the whole lending framework. CIBIL™ has a record of your credit history pertaining to loans and credit cards, on the basis of which, it generates a CIBIL™ score. This score helps lenders in evaluating your creditworthiness and future loan repayment capacity, ensuring that they do not end up with high-risk borrower category.

What is considered a good CIBIL™ score?

CIBIL™ score is a three-digit numeric component that forms part of the main credit report depicting your overall creditworthiness for availing debt. It is in the range of 300-900 and is evaluated based on your past credit history.

• A CIBIL™ score in the range between 750-900 is deemed a good credit score signifying the borrower’s financial discipline and capability for loan repayment.
• Any score in the range of 550 – 700 is deemed a moderate score implying the borrower is showing a little risk with respect to loan repayments.
• A score between 300 – 549 leads to lenders rejecting loan or credit card approvals owing to the high risk associated with such a low CIBIL™ score.

The higher the CIBIL™ score, the greater are your chances of availing of debt in the best possible and hassle-free manner.

Won’t I get a personal loan for a low CIBIL™ score?

Though lenders prefer borrowers with a good CIBIL™ Score for granting personal loans, still there are ways in which you can get a personal on a low CIBIL™ Score. Here are other ways to secure a personal loan when your credit score is low.

Steady Income

Ensure that you have a steady and good income at all times so as to improve your chances of getting a personal loan approved. However, one should not forget that the final loan approval process by lenders consider many factors, including credit score before granting a loan.

Regular Payment of Taxes

Ensure that you pay your tax on a regular basis so as to have a good impression on your loan application profile. Banks and other financial institutions normally look at your income returns for the past two years to evaluate your income, before granting approval to personal loans, subject to fulfilment of other loan eligibility criteria.

Bank Balance

A good bank balance assures a lender of your financial soundness to repay debts on time, thus increasing your chances of getting a personal loan approved faster.

Guarantor / Co-applicant

A family member with a good CIBIL™ Score can also be made as a guarantor or co-applicant for your personal loan, so as to improve your chance of getting the loan approved by lenders.

Go for a smaller Loan Amount

With a CIBIL™ Score less than 750, if you have fulfilled the other eligibility criteria then lenders may provide you with a personal loan but maybe a lower amount may get sanctioned or at a higher rate of interest than originally applicable.

Timely repayment of Debt

Even with a low CIBIL™ Score ( which could be due to various other reasons), if you have been doing repayment of loans or credit card dues on a timely basis, then this will help you to improve your CIBIL™ Score. This in turn would ensure that lenders consider you for a potential personal loan.

FAQs

Disclaimer

The 4 credit bureaus- CIBIL™, Equifax, Experian, and CRIF Highmark offer credit scores in India. The points mentioned above are true for credit scores from any bureau, not just CIBIL™.