Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs

SUPPORT

Menu  
 
Apply Now
Apply Now

Tata Capital > Blog > Personal Use Loan > How does the Co-Applicant’s CIBIL Score Impact your Personal Loan Application?

Personal Use Loan

How does the Co-Applicant’s CIBIL Score Impact your Personal Loan Application?

How does the Co-Applicant’s CIBIL Score Impact your Personal Loan Application?

Availing of a personal loan with a co-applicant comes with a host of benefits. If your co-applicant has a steady income and a high CIBIL score, you can qualify for a bigger loan amount and more attractive personal loan interest rates.

Why, yes! So, if you are co-applying for a loan, read on to understand how your personal loan co-applicant’s credit score impacts your loan eligibility.

How do CIBIL scores work?

The Credit Information Bureau (India) Limited or CIBIL assigns each individual a credit score after considering their detailed credit information. Your CIBIL score represents your creditworthiness on a scale of 300 to 900. Here, the higher your score, the more your chances of securing a loan at favourable terms.

Typically, a score over 750 is considered excellent by the lenders.

Impact of your co-applicant’s CIBIL score

Applying for a personal loan with a co-applicant who has a good CIBIL score can boost the chances of your loan getting approved.

You can be eligible for more competitive interest rates and a higher loan amount when you apply for a personal loan with a cosigner who has strong credit. Conversely, a co-applicant with a low CIBIL score can lower your loan approval chances.

Your co-applicant’s score doesn’t affect your CIBIL score in any way.

When you co-apply for a loan, you share the burden of loan repayment. If either of you fails to repay the loan timely, it negatively affects your and your co-applicant’s CIBIL score.

Risks to Consider When Applying with a Co-Applicant

Applying with a co-applicant can improve eligibility, but it also comes with certain co-applicant risks you should be aware of. When you apply for a joint loan, lenders assess the financial behaviour of both applicants. If your co-applicant has unstable income or a weak repayment record, it can lead to personal loan co-applicant issues such as higher interest rates or a lower approved amount.

You must also consider the risk of taking a personal loan with a cosigner with bad credit, because their profile can affect your chances of approval. Any gaps in their repayment history may create loan eligibility risks for you as well. Before co-applying, make sure both of you have steady income and responsible credit habits so the loan journey remains smooth.

How Co-Applicant Loan Defaults Impact Both Applicants’ Credit Scores

When you co-apply, both of you share equal responsibility for repaying the loan. If one borrower misses EMIs, the co-applicant loan default is recorded on the loan account, and the lender marks the entire loan as overdue, not just the portion missed by one person. This means the impact of co-borrower default affects both borrowers’ profiles immediately.

Lenders then report the delay to credit bureaus, which leads to negative credit score effects for both applicants. Even if the default was not your fault, your credit report reflects the missed payment, reducing your future borrowing capacity. This is why it’s important to track EMIs together and make sure payments are always made on time.

How to select a co-applicant?

Typically, your spouse, parents, siblings or other family members can be your co-applicants. Here are a few things to keep in mind before co-applying for a loan.

The combined income of both applicants is considered. So, choose a personal loan co-applicant with a substantial monthly income and a high CIBIL score to improve your loan eligibility.

If your co-applicant defaults on their share of the EMI payment, it can lower your future loan approval chances.

Steps to Improve Your Co-Applicant’s Credit Score Before Applying

Before applying for a personal loan with a cosigner, it helps to strengthen your co-applicant’s profile. Here are practical ways to improve co-applicant credit score and steadily raise the co-borrower’s credit rating:

1. Start by checking your co-applicant’s latest credit report so you both understand the exact issues affecting their score and can plan appropriate co-applicant credit repair tips.

2. Encourage them to clear overdue credit card bills or pending EMIs, because timely repayments immediately strengthen repayment history and lift their credit rating.

3. Ask them to reduce their credit utilisation to below 50% of the approved limit, as lower utilisation shows disciplined spending and improves creditworthiness.

Benefits of high credit scores in personal loan approvals

From the lender’s perspective, a high CIBIL score translates into good repayment capacity. This means you may receive hassle-free loan approval, fast processing, and a speedy fund disbursal.

If you have a steady income source, a high credit score, and no history of loan defaults, lenders may also extend pre-approved loan offers.

 Before approaching a financial institution for personal finance, check your and your co-applicant’s CIBIL score. If you have a poor score, you can improve it by paying your credit card bills, clearing your outstanding dues, and making pending debt repayments on time. Besides that, try to limit your credit card spending to 50% of the approved limit since it depicts a good spending discipline.

Moreover, you shouldn’t apply for multiple loans simultaneously as it portrays you as ‘credit hungry’, which lowers your CIBIL score.

Over to you

Now that you have acquainted yourself with the nitty-gritty of co-applying for personal finance, it’s time to find a reliable financier. Turn to Tata Capital for relaxed personal loan eligibility, competitive loan terms, and extended tenures.

Apply for personal finance online today.

Apply Now

Get an Instant Personal Loan for all your needs !

Apply now
Popular Searches
Term Loan Personal Loan for Government Employee Personal Loan for Salaried What is Personal Loan Personal Loan Prepayment Personal Loan Application Process 3 Lakh Personal Loan 4 Lakh Personal Loan 6 Lakh Personal Loan 7 Lakh Personal Loan 8 Lakh Personal Loan 9 Lakh Personal Loan
More About Loans
Instant Personal Loan personal loan emi calculator personal loan interest rate personal loan eligibility Marriage Loan Document Required for Personal Loan Home Renovation Loan Medical Loan Personal Loan Balance Transfer 5 Lakh Personal Loan Small Personal Loan Travel Loan Personal Loan for Women 2 Lakh Personal Loan 10 Lakh Personal Loan

FAQs

Who is eligible to be a co-applicant or co-signer on a personal loan?

A personal loan co-applicant is usually a close family member such as your spouse, parent, or sibling. Lenders generally prefer someone with a steady income and a strong credit profile to strengthen the overall application.

How to improve the credit score of a co-applicant?

Your co-borrower can improve their score by clearing pending dues, lowering credit utilisation, correcting credit report errors, and maintaining timely repayments. These steps help strengthen their profile before you apply for personal loans with a co-applicant.

What combined income considerations are used in loan approvals?

Lenders add the net monthly income of both applicants to evaluate repayment capacity. A higher combined income can increase your eligible loan amount when you apply for a personal loan with a cosigner.

How does the co-applicant’s credit history affect interest rates?

If your co-applicant has a strong credit record, lenders may offer better rates because the risk is lower. A personal loan with a cosigner with bad credit can lead to higher interest rates or stricter loan terms.

Can I apply for a personal loan without a co-applicant?

Yes, you can apply independently if you meet the lender’s eligibility criteria. A personal loan co-applicant is only needed when you want to boost eligibility or apply for a higher loan amount.

Are joint loan EMIs reflected on both applicants’ credit reports?

Yes, joint EMIs appear on the credit reports of both borrowers. Any missed payment affects the credit score of each applicant, even if only one personal loan co-applicant is responsible for the delay.

Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Home Loan EMI Calculator

Business Loan EMI Calculator

Used Car Loan EMI Calculator

Two Wheeler Loan EMI Calculator

Loan Against Securities Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Private Equity Funds

Useful Links and Resources

Policies, Codes & Other Documents

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download