CIBIL Score for Personal Loan

Lenders consider various factors when you apply for a personal loan. These factors include your current net monthly income, age, existing credit obligations, nature of the job, and so on. One of the most important factors is your CIBIL score for personal loan. You must ensure that your CIBIL score is always high if you want to get hassle-free personal loan approval.

The majority of lenders require 750 to 900 credit score for personal loan. You can get a personal loan with a CIBIL of 750 and above. That is because lenders have to be sure that you have the ability to repay your loan amount before they approve your application. Currently, there are four credit rating agencies in India, namely TransUnion CIBIL, Experian, CRIF High Mark and Equifax.

Also Read : CIBIL Score Meaning

• Lower rate of interest: Most lenders in India decide on personal loan interest rates according to the applicant’s risk profile. That is why applicants with a high CIBIL score for personal loan get lower interest rates for their loans. The interest rate has a major impact on your personal loan. Even an increase of half a percentage in interest rates can impact your EMIs (equated monthly instalments) and subsequently, your finances. Therefore, having a credit score of 750 or more is important to get you lower interest rates.
• Faster loan approval: 750 to 900 is the Best CIBIL Score Range for personal loan. A high CIBIL score indicates your creditworthiness, allowing your lender to make decisions easily regarding your personal loan application at a faster pace. Instant approval on a loan is helpful when you are in urgent need of funds and a higher credit score will result in faster approval. 
• Better negotiation power: Almost every lender prefers providing personal loans to creditworthy customers who can pay back their loans on time without a hassle. If you have a high credit score for personal loan, you can certainly be a desirable borrower. This could give you the power to negotiate with the lender for a lower interest rate or concession in processing fee.
• Higher loan amount eligibility: For lenders, a higher loan amount means an increased risk of default or late payment as the EMI will be higher for the borrower. For this reason, even if an individual with a low CIBIL score gets loan approval, the quantum of loan provided will be much smaller than what they applied for. However, if you have an excellent credit score, you can avail a higher loan amount. The minimum CIBIL score for personal loan varies from 750 to 900.
• Pre-approved loan offers from banks: If you are looking for an instant personal loan, a pre-approved loan from a bank can be a great option. However, these loans are offered to select customers only. A lot of analysis happens in the form of a good credit score and account balances before releasing a pre-approved offer. Customers with a good credit score and CIBIL report have higher chances of getting a pre-approved personal loan from their bank.
• Longer tenure availability: A longer loan repayment tenure makes your EMIs lower and more affordable. However, lenders consider a longer tenure loan riskier. With a high CIBIL score, your chances of getting approval for longer loan tenures are higher.

Also Read : CIBIL Dispute

Every lender has specific eligibility norms for personal loans. The CIBIL score required for personal loan may also vary from bank to bank depending on the profile of the borrower, relationship with the bank and other factors. 

Following is an example of CIBIL score for personal loan requirement from PNB Housing Finance Ltd.:

Your chances of getting personal loan approval are bleak with a low credit score. However, there are some ways to improve your credit score for personal loan. Following are some tips on how to increase CIBIL score for personal loans:

• Pay your EMIs and credit card dues on time: Make sure you pay your EMIs for existing loans or credit card bills (if any) on time and in full to enhance your credit score. To avoid missing your payments, you can set reminders or opt for the auto-debit option. With timely payments, you can improve your CIBIL score for personal loan as it shows how credible a borrower you are.
• Keep your Credit Utilization Ratio low: Lower credit utilization ratio for a long time shows that you are capable of handling additional credit. You can request an increased limit on your credit card to your bank. It will help you maintain a low credit utilization ratio, which will result in improving your credit score. 
• Have a healthy credit mix: Maintaining a healthy credit mix is crucial for better credit score calculation for a personal loan. It means the right combination of secured (home loan, loan against property or any asset-backed loan) and unsecured credit (personal loan, credit card, or any collateral-free loan). People with too many unsecured loans or secured loans usually have lower CIBIL scores. The minimum CIBIL score for personal loan should be at least 750.
• Check your credit report frequently: Check your credit report frequently to look for any discrepancies. Getting the errors in your report rectified can improve your CIBIL score. Doing a frequent check of a credit score will eliminate the chances of any error being added to your credit report. If you find any issue in your credit record, report it to the credit bureau for correction. 
• Do not close your old accounts: Closing your old loan/credit card accounts is not good for your credit score as lenders will analyze your repayment capacity through it by seeing how wisely you managed your credit in the past. If you have managed your past loan EMIs and credit card payments on time and in full, you are deemed fit for availing of a new personal loan.

Also Check: SBI Cibil Score for Personal Loan

Your credit score, whether it’s good or poor, can have some major impacts on your personal loan in the following ways:

• A low or poor credit score for personal loan can lead to the rejection of your personal loan application because the lender may consider individuals with bad scores as risky profiles. 
• The minimum CIBIL score for personal loan is 750 or above. If your credit score is below 750, your loan application may still get approved. However, the interest rate will be higher in that case.
• If you have a low CIBIL score required for personal loan, lenders may not offer you a personal loan for a longer tenure. Lending a personal loan involves a bigger risk for the lender than secured loans as there is no guarantee of repayment. Only your credit score and regular income can give surety to lenders that you are capable of repayment. 
• Having a poor CIBIL score also affects your eligibility for the higher loan amounts. You might get a lesser amount than required due to your poor CIBIL score.

Also Read : CIBIL Score Check With PAN Card

You can check free CIBIL score along with the detailed credit report online by visiting the official website of CIBIL. Following are the steps to be followed to check free credit score from CIBIL’s website: 

• Visit the official website of CIBIL to check the CIBIL score required for personal loan. 
• Fill in the form available online by entering the required information including your name, date of birth, contact number, address, income, identity and address proof, and credits taken by you. 
  After filling in and submitting the form, you will be directed to a payment page where you can pay the charges of Rs. 470 by your credit card, debit card or net banking.
• After making the payment, you will be directed to the authentication page. 
  Here you will have to answer some questions about your loans and credit cards before proceeding further.
• After you have identified yourself and completed your authentication successfully, CIBIL will send your score within 24 hours via e-mail.

You can also get a free credit score as CIBIL provides you one CIBIL score for personal loan and Report once a year without any charge. Apart from credit rating agencies, you can also check your credit score for free on various online lending platforms. 

Additional Reading: How to calculate credit score?