You will hear ‘CIBIL scores’ a lot in the finance world. For borrowers, in particular, the CIBIL score is significant. Whether you are looking to get a personal loan or a home loan, your lender will for sure first consider your CIBIL score before sanctioning or rejecting your loan request.
If you’re planning to apply for a personal loan, here are four things about CIBIL score that you must know:
How much should your CIBIL score be?
For personal loans or any other type of loan, you must have a healthy CIBIL score. A CIBIL score ranges from 300 to 900. Anyone with a score of 900 is usually considered to be an ideal candidate. However, if you have a score of above 750, you still have excellent chances of getting a personal loan sanctioned.
What affects your CIBIL score?
There are numerous factors that positively and negatively affect your CIBIL score, and subsequently, your chances of getting a personal loan. For instance, if you pay your EMIs or repay loans on time, your score is boosted. However, if you delay credit card and other EMI payments or max out your credit card limit, your CIBIL score comes down. Therefore, before taking a personal loan, be sure to check how your other loans and credit history are affecting your CIBIL score.
Be aware of your CIBIL score before you apply for a personal loan
This might seem like a practical thing to do, but a lot of people are unaware of their credit score before applying for a personal loan. You can obtain your credit report for free; the Reserve Bank of India has mandated credit bureaus to provide the credit score free of cost on a yearly basis to every individual. Understanding your creditworthiness before you apply for personal loan will give you an idea about your eligibility, and, if need be, you can then work on your credit health.
Other factors to consider in case you don’t have a CIBIL score
Your CIBIL score depends on your credit history. This score helps lenders to decide if it’s a prudent idea to extend a personal loan or any other type of loan to you. Usually, most people tend to have some credit history, which determines their credit scores.
To build your score, you can get a secured credit card and maintain it to build your CIBIL score within just a few months. In case you’re in urgent need of a personal loan and don’t have a credit score, your loan provider will then examine other factors, such as income and job stability, age, etc.
A personal loan from Tata Capital is an instant source of funds. Even if you might not need one right now, it’s wise to start building your CIBIL score to increase your chances of loan approval when needed.