One of the most popular financing options, personal loans support millions of people throughout trying times. You have total discretion over how to use the money you borrow through this loan. However, if you apply for this loan, your CIBIL score can make it difficult for you to secure financing. Check out this post if you’re unclear about the language or the optimal CIBIL score needed for a personal loan.
What is CIBIL?
CIBIL refers to Credit Information Bureau India Limited. It is a Reserve Bank of India (RBI) approved agency whose primary function is to assess the creditworthiness of borrowers. CIBIL is one of India’s most important credit bureaus, assisting financial institutions in risk assessments of applicants. CIBIL’s functionality is based on data shared with them by a variety of financial institutions, data collection agencies, and other similar organisations. CIBIL Score is an important factor that lenders consider when giving you a loan. Therefore, it is always advised to maintain at least a minimum CIBIL score to get Personal Loan. A borrower must meet the minimum threshold of the CIBIL score for a Personal Loan to increase the chances of a Personal Loan with a lower interest rate and several benefits from a lender.
However, many people confuse CIBIL with the CIBIL score. In reality, both terms are only interrelated, but their meanings are vastly different. So, what exactly does the CIBIL score mean? Let’s find out.
What is CIBIL Score?
A CIBIL score is a three-digit score. It represents a borrower’s capacity to make timely payments on credit obligations. Please note that the CIBIL score is also sometimes referred to as the credit score.
To calculate the credit score for a loan, the credit bureau considers your total debt across lenders along with your payment history. The platform demonstrates your creditworthiness in numeric expressions ranging from 300 to 900. Most lenders require a minimum credit score of 750 or more to be eligible for a Personal Loan. However, if you want to get a loan easily, your CIBIL score should be as close to 900 as possible. A score of more than 750 is considered a good CIBIL score for Personal Loan. However, there are some institutions which provide low CIBIL score Personal Loans against collaterals.
What is the Minimum CIBIL Score Required to Get a Personal Loan?
How much CIBIL score required for a Personal Loan is one of the most common questions asked these days. Most lenders believe that the credit score required for a Personal Loan should be more than 750 for the loan application to be approved. However, the minimum CIBIL score for Personal Loans is 750 as it is an unsecured loan. A person with a credit score of more than 750 can obtain a large loan at a low-interest rate. However, a credit score of less than 750 does not mean that you will be rejected for a loan. There is still hope to secure funds from a lender. Let’s look at the various ranges of scores to understand this better:
NA/NH
Don’t be surprised if you see this term while checking your credit score. The letter ”NA” refers to Not Applicable and “NH” refers to No History. Applicants would see these letters if they had never taken out a loan or used a credit card.
A Credit Score Between 300 and 549
A CIBIL score between 300 and 549 indicates a bad credit history. This may happen if you have previously defaulted on debt. It can also be a result of missed EMIs. With a credit score like this, getting a loan is nearly impossible.
A Credit Score Between 550 And 649
Personal Loan for CIBIL score of 550 to 649 is considered fair, not very good. The range indicates a delay in paying EMIs. It also suggests a habit of raising multiple loan queries. Applicants with such low CIBIL scores are deemed high-risk. If you fall within this range, you will either be turned down for a loan or granted one in exchange for high-interest rates.
A Credit Score Between 650 and 719
A good score falls within this range. Having this number gives the lender a good impression. It reflects a disciplined repayment history and low chances of default in the future. However, though this credit score may guarantee you a loan, it does not promise you a low-interest loan.
A Credit Score Between 720 and 749
The minimum CIBIL score required for a personal loan is around 720-750. This score shows that you are trustworthy when it comes to borrowing money and lenders are likely to approve your personal loan application faster. They may also offer you the loan amount you want at a reasonable interest rate.
A Credit Score Between 750 and 799
A credit score above 650 but less than 750 falls under the category of very good. You must have a long credit history with a favourable repayment record to belong to this category. Having this CIBIL score ensures a Personal Loan at a lower interest rate.
A Credit Score Between 800 and 900
This is the best CIBIL score for a Personal Loan. Excellent is the term used for borrowers with such a high credit score. Having this credit score shows regular EMI payments, low credit utilisation, and excellent financial management. Getting a Personal Loan on favourable terms is not tough with a credit score like this.
Since lenders are likely to offer a Personal Loan based on CIBIL score, make sure you pay your loan EMIs & bills on time to maintain a good credit score. Doing this will not only help you get a high loan amount but also you will get a competitive rate of interest on a Personal Loan.
Apply for Personal Loan
Why is Maintaining A Minimum Credit Score for Personal Loans Necessary?
- It Defines the state of your credit
- You can enjoy speedy loan approval and other benefits
- You can reap the benefits of a low-interest rate
- You may obtain a larger loan amount
What Are The Key Elements That Influence Your CIBIL Score?
Four major factors to determining your Credit Score for Personal Loan:
Repayment history
Skipping on your monthly debt obligations or defaulting on your existing loans worsens your credit score.
Credit mix
Instead of relying on a single funding source, you can diversify your debt portfolio by raising funds through both secured and unsecured means. Doing so helps in improving your CIBIL score.
Multiple loan enquiries
Sending out too many loan inquiries to single or multiple lenders suggests your debt burden is likely to increase in the future. As a result of this, your CIBIL score will decline.
Credit utilization
This is the percentage of available credit that you are using. A low credit utilisation percentage helps in improving your CIBIL score.
How to Check Your CIBIL Score For A Personal Loan?
To check your CIBIL score for free on credit success website, you need to simply follow the steps given below. Just a few clicks and your CIBIL score will be instantly displayed!
On the top right corner of the webpage, click on the button titled “Free CIBIL Score”.
Scroll over to the section “Check your Credit Score For Free”
Select your employment type, and gender and fill in all your details such as Name, Mobile Number (on which you will get an OTP), PAN Number, Date of Birth, Address, State, City and Pin Code.
Click on the “Submit” button
Your CIBIL score will get instantly displayed!
At credit success, we believe in providing you with an end-to-end experience. Hence, we do not just stop at displaying your CIBIL score. You can also view your CIBIL report details by clicking on the “View Report” button.
How to Acquire A Personal Loan On A CIBIL Score Below 750?
If you need a Personal Loan with a bad CIBIL score, some factors can help. Applicants that meet the requirements specified below can still receive funding with ease.
High income: High income assures lenders of timely repayments. And, if you have one, you can submit your loan application to get instant approval.
Employment stability: Stability in a job suggests you are earning enough to meet your necessities. If you avoid switching jobs frequently, the lender might approve a loan without any hassles.
Co-applicant: Adding a co-applicant to your application also improves the chances of your loan approval. However, make sure that you at least have the required CIBIL score for Personal Loan.
How Can You Improve Your CIBIL Score from 550 to 750?
To improve your CIBIL score from 550 to 750, you can follow the below-mentioned tips:
Always repay your past debts on time
Avoid applying for multiple loans at the same time
Maintain a good credit mix
Rectify any errors in your credit report as soon as possible
To Sum It Up
The whole concept of a CIBIL score is to check if you can repay your dues by ascertaining the required CIBIL score needed for a Personal Loan. A good score does not always guarantee you loan approval. Similarly, a bad credit score for a Personal Loan does not always imply rejection. The lender evaluates several other parameters before accepting or rejecting your loan application. Most banks generally require you to show a minimum CIBIL score required for a Personal Loan. CIBIL Scores are measured on a scale between 300 and 900, with 900 indicating the highest and 300 being the lowest. The minimum credit score for a Personal Loan that a borrower generally needs to maintain to be easily eligible for a loan is 750. Having said that, it can never hurt to maintain a high credit score. As such, even if your CIBIL score is average, but you have stable employment and a steady income, you can get a Personal Loan from credit success without any trouble.
FAQs on CIBIL Score for Personal Loan
- How to check the CIBIL score for a Personal Loan?
You can check your CIBIL score for free with credit success. Simply click on this link: https://creditsuccess.com/check-cibil-score.php to get started.
- Can I get a Personal Loan with a CIBIL score between 300-700?
A CIBIL score above 700 is generally considered more favourable for getting a Personal Loan. Any score lower than that can result in high-interest rates. If your credit score is between 300-550, you might not be able to avail of a Personal Loan. Even if you do, it could come with high-interest rates, added document scrutiny and a lower loan amount. - Can I get a Personal Loan with a CIBIL score of more than 700?
You can certainly get a Personal Loan with a CIBIL score of more than 700 as it reflects good credit behaviour. You can find the best Personal Loan offers at attractive interest rates with a 700+ CIBIL score. - What is the minimum CIBIL score required for a Personal Loan application?
The minimal CIBIL score required to apply for a Personal Loan with credit success is 700.
