A personal loan can be a fast way to meet financial needs or spend on a planned investment. However, obtaining approval is dependent on one essential factor: your CIBIL score. Now, let’s look at why CIBIL score matters for personal loans and how it can influence the loan amount you can borrow.
What is a CIBIL Score?
A CIBIL score is a three-digit number that ranges from 300 to 900. A CIBIL score is a measure of your ability to pay your debt. CIBIL calculates the CIBIL score by watching their credit behaviour with the various aspects of credit history, repayment behaviour, credit usage and loans the borrower has. A high score shows the borrower is responsible and trustworthy with money.
Is CIBIL Score Important for a Personal Loan?
Yes, definitely. A CIBIL score matters for personal loans since, when lenders evaluate a personal loan request, they determine the likelihood of you repaying a loan based on your CIBIL score. The higher your CIBIL score, the greater the probability that you will get your loan approved, be qualified for a greater loan amount, and receive lower interest rates.
Minimum CIBIL Score for Personal Loan
For personal loans, a minimum CIBIL score of 700 is preferred by most banks and NBFCs. Anything above 750 is considered good. If your score is below 650, your chances of getting a loan are low, or you will get the loan at a much higher interest rate.
What is a Good Credit Score for Getting a Personal Loan?
A credit score of 750 and above is ideal. If you possess a 710 credit score, you can still get personal loans but will likely have to provide proof of income stability or more documents. This is because lenders consider your credit score and income when you apply for a personal loan.
Importance of Credit Scores
The importance of credit scores goes beyond loan approval. It affects:
- The interest rate you are offered
- The amount you are eligible for
- The speed of loan approval
- Your credibility as a borrower
A good credit score builds trust. A poor one limits your options.
What is the Use of CIBIL Score?
The CIBIL score is used to exhibit how well you handle credit, functioning as a financial report card. Lenders use it to determine whether they will lend you money, how much to lend, and on what terms. Some employers and landlords will even examine your CIBIL score before offering you a contract for employment or a lease.
How to Affect Your Credit Score
Your actions directly affect your credit score. Here’s how:
Always pay EMIs and credit card dues on time
Keep credit utilisation low (below 30%)
Avoid multiple loan applications in a short time
Maintain a healthy mix of secured and unsecured loans
Don’t close old credit cards, as long credit history helps
How The Lending Monk Helps
Moderate CIBIL score, and we will help you find the most suitable loan based on your profile. Here’s how:
- We make borrowing loans easy, fast and trustworthy
- We assist you in ensuring that you get low interest rates and high loan amounts
- We help you find the right bank based on your income, credit score, and type of loan
- We ensure that it is quick and with the least amount of paperwork
- We help guide you in improving your CIBIL score to whatever is required
The Lending Monk will bring together your financial needs with the correct lending solution. Even if your score is not the best, we guide you on the steps you can take to prepare before applying.
Final though
The CIBIL score is critical for personal loans as it dictates your chances of approval, the amount you get, and the interest you pay. Understanding the importance of credit scores will allow you to make the best financial decisions.
Before applying for a personal loan, check your score and if it’s low, improve it. Once you’re ready, we encourage you to check out The Lending Monk to compare the best personal loan options for your requirements.
Also Read : Personal Loan Tips and Tricks You Should Follow