Minimum CIBIL Score One Requires for a Personal Loan
Sometimes you might find yourself in need of money for vital expenses like medical costs, weddings, renovating a home, or travel loans. In such cases, you need to look for a loan that best suits your needs. When you apply for a personal loan, you cannot ignore your CIBIL score to get approved. This is what any personal loan agent will tell you.
Most lenders will check your CIBIL score even before you complete the online application. Also, they will reject your application if your score is not high enough. Some lenders require a minimum CIBIL score of 750 or above for personal loan approval, while others make do with a score of 650.
So, how do you figure out how much of a minimum CIBIL score is required for a personal loan? First, you must learn what CIBIL means and how it affects your eligibility for loans and other financial services.
What is a CIBIL Score?
The CIBIL score is a measure of an individual’s creditworthiness. Lenders and personal loan agents calculate it based on many factors, like credit card payment history, home loans, vehicle loans, etc. Your credit score, or CIBIL score, assures lenders of your ability to repay the debt.
The CIBIL score ranges from 0 to 1000 and helps lenders decide if they should offer you a loan. The higher your CIBIL score, the more likely you are to get access to better deals. A minimum CIBIL score of 700+ should be maintained to get a personal loan at the best interest rates.
Impact of your CIBIL Score on your Personal Loan
Your CIBIL score is the most important factor in deciding if you will be approved for a personal loan. But your credit score is not the only deciding factor. Your eligibility also depends on other factors such as your salary, location, total debt, employer, etc.
The following CIBIL score ranges will help you gauge your personal loan approval chances:
- 750-900 CIBIL Score A CIBIL score of 750 or above shows that you are a creditworthy person who practices fiscal discipline.
- 600-750 CIBIL Score: Most lenders will give you a personal loan if your CIBIL score falls in this range. But you may be offered a higher interest rate and/or a shorter loan tenure.
- 300-600 CIBIL Score: The CIBIL score in this range shows an unreliable credit history and a lack of fiscal discipline. It may lead to the rejection of your loan application. In this situation, the only way to get a personal loan is to offer collateral, find a guarantor, or even take out a Loan Against Property.
Tips to Improve Your CIBIL Score
You should use the following tips to reach a minimum CIBIL score to get a personal loan:
- Pay the entire sum on your credit cards every month, or use only up to 30% of the credit limit on your card to keep your debt low.
- Pay off your loan or credit card debt on or before the due date.
- Close off any pending loans or credit card dues early if you have extra money in your account.
- If you do not want to carry large balances or pay high interest rates each month, apply for a secured credit card instead of an unsecured one.
- Your ratio of secured to unsecured loans is your credit mix. For instance, your lender will think you are credit-hungry if there are more loans with no collateral than with collateral.
Things to Consider Before Getting Personal Loans
Several personal loan agents suggest these basic tips to improve your chances of getting loans instantly:
- Compare Different OffersYou will come across personal loans from various lenders, each with its own interest rates and repayment terms. So, before you apply for a personal loan, you should do some market research and compare offers.
- Maintain a Decent CIBIL Score When you apply for a personal loan, lenders will first look at your CIBIL score. A minimum CIBIL score of 750 or above raises your chances of personal loan approval.
- Calculate Total CostAlong with the interest rate, the lender might also charge other fees, such as a processing cost, a late fee, and a prepayment or foreclosure charge. So, it is crucial to add the total costs before you apply.
- Lower Credit Card Utilisation RatioYour credit card utilisation ratio should be under 40% when you apply for a personal loan. To lower the ratio, pay off your loans and credit cards before they are due.
- Do Not Apply for a New Credit CardAvoid applying for credit shortly after you have been rejected for a personal loan or credit card. Before you apply for a credit card again, wait at least two months after the rejection.
While you might get a loan even if your credit score is low, it is worth learning that credit scores greatly affect the approval process. So, it is best to have a good credit score before risking rejection, which will further lower your score. You may still be able to get a personal loan with a minimum credit score of 600–700, but the lower your score, the lower the personal loan amount and the higher the interest.
If you are looking to apply for a personal loan, it is best if you first consult your bank, credit card provider, or personal loan agent. They will help you ensure that you meet the eligibility criteria. Visit Piramal Finance to get a personal loan with a minimum CIBIL score or use one of their many services and products.
Also Read: Lowest Personal Loan Interest Rates for August 2022
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