Here’s how your CIBIL Score can impact your personal loan application
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A CIBIL score is indicative of your creditworthiness and repayment capabilities. It is calculated on the basis of your repayment history and ability to manage your credit accounts. Lenders usually assess your loan eligibility based on your CIBIL score among other factors.
Having a score of 750 or more is ideal for a personal loan application. But what if you have a lower score? Let’s understand the impact of CIBIL score on your personal loan eligibility.
Your CIBIL score unquestionably impacts your personal loan approval the most. It also affects the loan terms offered to you. Here’s how:
CIBIL Score Range |
Probability of Loan Approval |
750-900 |
A score of 750 and above is considered to be ideal and can help your loan application get approved instantly on favourable terms. |
600-750 |
Some lenders offer personal loans to applicants with CIBIL scores falling under this range as well. However, the lender may charge a higher interest rate or offer a shorter tenure. |
300-599 |
IIf your CIBIL score is between 300 and 599, getting a loan approval can be quite difficult. Consider implementing strategies and take measures to improve your score before applying for a personal loan. |
If your score is lower than 600, you can employ the following tips and tricks to improve your score:
Pay Your Dues on Time
Be sure to pay all your loan EMIs and credit card dues on time. This improves your repayment history, boosting your CIBIL score.
Manage Your Credit Utilisation Ratio
This ratio refers to the percentage of the credit available to you that you are currently using. It signifies how responsibly you manage your credit. Usually, a ratio of 30% or lower is considered ideal.
Maintain a Healthy Credit Mix
Ensure that your credit portfolio consists of secured and unsecured loans as well as different types of credit cards. Diversifying your credit portfolio demonstrates your financial discipline. A healthy credit mix assures the lender that you can manage various types of monetary obligations easily.
Avoid Making Multiple Credit Applications
When applying for the required personal loan avoid making multiple applications within a short span. Lenders usually conduct hard checks on your credit profile which has a slight impact on your CIBIL score. Too many applications can lead to a drop in your score.
Check for Errors in Your CIBIL Report
Access your credit report from TransUnion CIBIL which is available for free once a year, as per RBI guidelines. You can check this report and look for any errors or inaccuracies in your credit information, repayment records, and personal details. If you identify any mistakes, raise a dispute or complaint with TransUnion CIBIL and get them rectified immediately.
Frequently Asked Questions
Why is a CIBIL Score important for a personal loan?
In simple terms, having a good CIBIL score is essential to secure a loan. This is because it determines your repayment ability, which the lenders assess before approving your application. This score helps:
Assess your creditworthiness
Determine the maximum amount you can borrow
Determine the interest rate of your loan
However, you can still avail an instant personal loan with a low CIBIL score. Here, the lender may charge a higher interest rate and provide a lower sum than requested.
How to get a personal loan with a low CIBIL score?
Some lenders offer personal loans to individuals with low CIBIL scores. You can check the minimum requirement on the official websites of financial institutions to find a lender that is willing to offer a deal. However, do note that the loan terms may not be as favourable.
Does CIBIL score affect your personal loan eligibility?
Yes, your CIBIL score affects your personal loan eligibility. A higher CIBIL score increases your chances of availing an affordable credit easily and vice-versa. If your CIBIL score is 750 or above, chances are that you will be granted a personal loan instantly.
Can I apply for a personal loan without having a CIBIL score?
If you do not have a CIBIL score and are new to credit, the lender will usually check your NTC score. This score usually ranges between 101 to 200. Your score should be 150 or more to be eligible for a personal loan.
