A CIBIL score is a crucial aspect in determining your creditworthiness. When you apply for a home loan, a personal loan, or other credit product, your CIBIL score is taken into account by lenders. A personal loan is an unsecured loan with a short or medium repayment term. It can be used for a variety of immediate needs including vacations and wedding expenses.
What is the CIBIL minimum score for a personal loan?
When applying for a personal loan, lenders consider a variety of factors such as your current salary, age, existing credit obligations, work nature (e.g. salaried or self-employed), and so on. Your CIBIL Score is one of these factors to be considered. Because the CIBIL score is the most searched credit score. Keeping it high is a smart idea if you’re looking for a personal loan.
There is no set CIBIL Score that must be met in order for a personal loan to be granted. A CIBIL score of 750 or more, on the other hand, is a strong score that can open up a variety of loan choices for you. As a result, having a good credit score can help you acquire a bigger loan with lower interest rates and a shorter repayment period.
A CIBIL score might range from 300 to 900. You should aim for a score of at least 900 because it will help you acquire better loan and credit card rates. The majority of lenders consider a CIBIL score of 750 or higher to be ideal. With a CIBIL of 750 or higher, you can acquire a personal loan. According to CIBIL data (as cited by the Economic Times). If a credit score exceeds 750, 80 percent of loans are granted.
Before approving your loan application, lenders must ensure that you have the financial means to repay the borrowed funds. Your credit score is used to determine how likely you are to default.
What role does credit score play in the loan application process?
A person’s credit score is the accumulation of that person’s credit history over a period of years. It is made up of a person’s payment history for loan installments and credit card payments.
If a person defaults or misses any of these payments. It will appear on his or her credit record, lowering the person’s credit score. As a result, the person will be disqualified from receiving any personal loans (or other loans) or credit cards from banks or financial organisations.
Even if a personal loan is granted to such a person. The interest rate will be substantially higher, and the loan amount sanctioned may be less than the amount requested.
As a result, it is critical to keep a solid credit score in order to obtain. Good personal loans and other loan products, as well as credit cards.
Is it possible to receive a personal loan if I have a bad credit score?
When a person asks for a personal loan, the credit score is the first thing that is looked at. The specifications of a possible personal loan that can be granted depending on a person’s credit score are listed below.
- Any lender considers a credit score of 300 to 599 to be low. It serves as a warning to the lender about the applicant’s poor credit history and the loan’s unviability. As a result, most lenders will turn down personal loan applications from candidates with such a poor credit score. It is critical for such an applicant to take immediate steps to enhance his or her credit score in order to gain access to loans.
- A credit score of 600 to 749 is regarded below average, but not as dangerous as the prior range. Many lenders may choose to disregard this score and give personal loans to applicants based on other considerations such as the applicant’s sound repayment capacity, proof of income provided by the application, loan against any security or collateral, employment history, and bank relationship. However, even if you are approved for a loan, the interest rate will be greater, and the terms of the loan may not be acceptable to the borrower.
- All lenders consider a credit score of 750 or higher to be appropriate for personal loans. For candidates with such a high credit score, several lenders may provide fast loans.
The Bottom Line
Before applying for a personal loan, it’s critical to understand your credit situation. You should look at your CIBIL score because it will tell you where you stand in terms of credit history and payments. If your CIBIL score is poor you can work on it. Over time and gradually improve it by following the appropriate steps. As a personal loan is an unsecured loan. The most important consideration for any of the lenders is your repayment ability. Your repayment ability is determined by your CIBIL score, which is why it is important to be consistent with your credit score. Better to grow your credit score and then apply for a personal loan to have a hassle-free experience of obtaining any kind of debt.
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