If you are looking for a personal loan to cover for some immediate expenses, you would want to know about one of the most important determinants of your loan approval – the CIBIL score.
CIBIL is an authorized bureau in India that provides every individual with a credit score. The score is a three-digit number ranging between 300 and 900 that acts as a benchmark for lenders to gauge your credit health.
A CIBIL score includes all the information related to your EMI payments, your account’s outstanding balance, credit card payments and any alterations to your credit limit and other details associated with your credit profile. Subsequently, a mathematic formula is devised to calculate your final credit score. If you have made all your EMI payments in time without any defaults in the past, your CIBIL score would be high. Conversely, if you have a history of defaulting, it will adversely impact your credit score.
Besides factors like monthly income, the CIBIL score is one of the most critical parameters that decide your personal loan eligibility. The higher your CIBIL score, the better are the chances of your getting a loan approved.
Additional Read – What is a CIBIL Score? Why is it important while applying for a loan?
As a preliminary step, lenders look for a minimum CIBIL score of 750 before they take a call on your loan application.
What do different CIBIL scores mean?
Herein, the chances are that you will not qualify for a personal loan. A score between 300 and 600 warns the lenders about bad credit behaviour of the borrower. Most banks will disapprove your personal loan application immediately.
With a credit score in this range, there is a fairly moderate chance of your loan application being approved by lenders. Financial institutions would usually look for other factors to gauge your personal loan eligibility, such as your monthly income, other existing loans, employment stability, etc.
750 or above:
If you have a score of 750 or above, your loan application is very likely to be approved. Besides, there are other advantages of maintaining a high CIBIL score. For instance, you may be able to negotiate a lower interest rate with the lender.
Additional Read: How CIBIL Score can Help You Avail a Personal Loan with Ease?
Ways to improve your CIBIL score
- Try to pay your bills on time: Paying your credit card bills and other debts on time can significantly improve your personal loan CIBIL score. Even a single instance of a missed payment can negatively impact your score.
- Limit your spending to 50% of your credit card’s approved limit: If the approved limit of your card is Rs 2 lakh, try to restrict to your spending to less than half of the amount. It represents a good spending discipline.
- Avoid applying for multiple loans simultaneously: When you apply for a loan or credit card with multiple lenders, you appear ‘desperate’ for credit, making a lender more likely to reject your application. Multiple loan applications also adversely impact your credit score.
Additional Read: How to Avail a Personal Loan With a Low CIBIL Score?
Now that you know how much CIBIL score required for personal loan; look no further than Tata Capital if you are searching for a reliable lender. Faster approval and quick disbursal, affordable interest rates, and customized solutions are some features that make Tata Capital the best in the industry.