With people aiming for financial independence and a better future, getting loans has become a simple process in India. And education loans are no different! While a wide range of finance options are readily available at your convenience, many lenders require you to present a good credit score to avail of it. Here’s why the CIBIL score for education loan is so important.
What is the CIBIL score in education loans?
The Credit Bureau of India Limited is an organisation that keeps a record of all the financial transactions of individuals, such as loans and credit card payment history, EMI payments. The CIBIL score rangesfrom 300 to 900 and makes up for your entire credit history and thus helps lenders determine your repayment capacity.
Naturally, the score also affects the loan amount and the interest rate you’re eligible for. So, it is important to maintain a healthy credit score if you wish to apply for an education loan.
A high credit score of 750 and above is usually excellent and makes your education loan approval process easy.
CIBIL score requirement for an education loan
So, you know that a good credit score is essential for the approval of a loan. But what if you have a low CIBIL score? Are you a student or a parent looking for a loan? Can you apply for a loan as a student with no credit history?
Consider these various scenarios to understand how CIBIL score works for education finance –
- If you’re a student without any credit history, then you can apply for an education loan with a working parent as a joint applicant or a guarantor. In such a case, the lender will consider the credit report of your parents to determine their repayment capacity on your behalf.
- If you’re a student with an existing credit line like a credit card, the lender will consider your credit history before approving your education loan. Then, it becomes important for you to maintain a good credit score. These days you can use an online tool to check your CIBIL score freeof cost.
- Most lenders will accept a low credit score for your education loan application if you’re deemed reliable based on various other factors.
Does an education loan affect your CIBIL score?
Just like any other type of loan, an education loan also affects your credit score depending on your repayment behaviour. It is also reflected in your credit history. If you’re regular with your EMI payments and have a clean borrowing history, it will positively reflect in your credit report.
In contrast, repeated delays in EMI repayments can unfavourably affect your credit score. You can perform a CIBIL score checkonline to keep track.
Additional Read: Top 5 Myths About Cibil Score
Over to you
Want to apply for a loan for your higher education but are not sure if you have the perfect credit score? You can perform an online CIBIL score check free with Tata Capital. Visit our website to check your credit score and get started with your loan process.
You can also apply for a quick education loan with us at competitive interest rates. To know more, contact us today!