CIBIL Score for a Personal Loan

Loans have always been our saviours at the time of financial crisis. Banks and NBFCs offer a variety of loans to suit ranges of funding needs. A personal loan is one such very lucrative and popular funding mechanism which can instantly solve your money problems without much fuss and formality.

Personal loan

It is an unsecured, short term funding tool which comes with least efforts and documentation. Any individual can avail this loan from the lenders for any purpose, like consolidation of some high-interest rate loans, weddings, vacation, education fees, etc. Applying for online personal loan and approval makes this a popular option of instant fundraising.

Personal Loan Eligibility Criteria

Every loan needs borrowers to fulfil some basic eligibility criteria for loan approval. The loan eligibility criteria are simple and require few documents for the processing. Some requirements are:

  • The borrower must be an Indian national.
  • The borrower’s age at the time of loan application must be 21 years or more.
  • The borrower must have a steady income and should be in the employment/business for at least two years.
  • A CIBIL score of more than 700.

What is CIBIL?

Your CIBIL score reflects your financial transactions and repayment history. It indicates your creditworthiness which every lender considers before approving the loan application. Four-credit bureaus are currently operating in India, out of which TransUnion Credit Information Bureau of India Limited (CIBIL), is the most popular one. The score given by this company is called CIBIL score. It is a three-digit numerical between 300 to 900.

Factors that affect your CIBIL score

Your CIBIL score depends upon many factors, like:

  • Your repayment pattern

It indicates your loan EMI and repayment pattern of your credit card dues. It is always advisable to pay your dues on time to avoid a poor credit score.

  • The ratio of credit utilization

It is a ratio of your total outstanding dues to your total credit limit. The ideal value of this ratio should be less than 30%. Lower the rate; better will be its impact on your credit score.

  • The type of your credit mix

It would help if you kept a wise mix of secured and unsecured loans in your basket. More proportion of unsecured loan may result in loan repayment default which can negatively affect your credit score.

  • Length of your credit history

More extended the history of your credit utilization better will be its impact on your credit score. 

Importance of CIBIL score for a Personal loan

A good credit CIBIL score is a reflection of your good credit history. It also gives assurance to the lenders about your creditworthiness. Apart from this, a good credit score gives you some advantages:

  • Lower interest rate

Your good CIBIL score can give you a chance to bargain for a personal loan at lower interest rates. The lenders have an assurance of your ability to repay the EMI on time.

  • Avail pre-approved loans

You can qualify for pre-approved loans if you have a good credit score. Such loans have minimum documentation and instant disbursement of the loan amount.

  • Longer tenure for loan repayment

If your credit score is right, you can dictate your terms and can have a personal loan with longer tenure.

It means smaller EMIs to suit your pocket.

  • Instant approval of the loan

A lender takes into consideration many factors before approving your loan application. Your good CIBIL score plays a decisive role in this and makes the loan approval process fast and easy.

  • Power to Negotiate

You can have a personal loan from a lender on your terms if you have an excellent credit score to your name. You can negotiate the rate of interest, the loan amount and the repayment tenure with the lender on this basis.

  • Lower loan processing fees and other charges

The lender may give you a concession on the loan processing fees if you have a good credit score to vouch for your creditworthiness.

A high CIBIL score is always a boon for the personal loan seeker as it makes the process fast and easy and can give you more loan amount as well. Before opting for loan must check the required cibil score for personal loan. A good credit score gives you a personal loan at a lower rate of interest.



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