Lenders look at your CIBIL score whether you apply for a mortgage, a personal loan, or another type of credit. A personal loan is a short- or medium-term unsecured loan with a short or medium-term payback period. It can be used to cover a wide range of unforeseen expenses, including travel and wedding costs. A stable credit score of at least 700 is required to obtain one. A CIBIL score of 750 is also required by some lenders.
For a personal loan, what is the CIBIL minimal score?
To get authorized for a personal loan, you do not need a certain CIBIL score. A CIBIL score of 750 or higher, on the other hand, is very good and can help you get a variety of loan options. As a result, a strong credit score can assist you in obtaining a larger loan with lower interest rates and a shorter repayment period.
A CIBIL score might range from 300 to 900 points. A credit score of at least 900 is ideal since it will help you get better loan and credit card interest rates. You may be qualified for a personal loan if your CIBIL score is 750 or higher. According to CIBIL data, if a credit score is above 750, 80% of loans are approved. Lenders must verify that you have the financial means to repay the borrowed amounts before approving your loan application. Your credit score is used to determine your risk of default.
In the loan application procedure, what role does credit score play?
- The aggregation of a person’s credit history over time determines their credit score. It is made up of a person’s loan and credit card payment history.
- If a person fails to make any of these payments, it will be noted on their credit report, which will affect their credit score. As a result, personal loans (or other loans) from banks and other financial institutions, as well as credit cards, will be denied.
- Even if such a person is given a personal loan, the interest rate will be much higher, and the loan amount accepted may be less than the amount asked.
- As a result, maintaining a great credit score is essential if you want to obtain strong personal loans and other credit facilities, as well as credit cards.
Is it possible to get a personal loan even if you have a bad credit score?
- A credit score of 300 to 599 is considered unsuitable for obtaining a personal loan by any lender. It tells the lender of the respondent’s low credit score as well as the primary reason for the loan. As a result, most lenders will reject applications for personal loans from people with bad credit. In order to get a loan, such an applicant must take immediate steps to improve his or her credit score.
- A credit score of 600 to 749 is below average, but not as bad as the previous range. Many lenders may choose to ignore this score and give personal loans to borrowers based on other factors such as the applicant’s ability to repay the loan, evidence of income submitted on the application, loan against any security or collateral, employment history, and bank connections. Even if you are authorized for a loan, the interest rate will be higher, and the terms of the loan may not be suitable for your needs.
- A credit score of 750 or higher is required to be considered for a personal loan. With such a high credit score, borrowers may be able to obtain quick loans from a range of lenders.
Final Thoughts
It’s vital to analyze your credit standing before applying for a personal loan. Your CIBIL score is important since it indicates where you stand in terms of credit and payment history. If you have a low CIBIL score, you can improve it over time by following the appropriate steps. Because a personal loan is an unsecured loan, the primary worry of the lender is the borrower’s ability to repay the debt. Because your CIBIL score indicates your ability to repay obligations, it’s critical to maintain a steady credit score. In order to have a smooth loan application procedure, it is essential to improve your credit score before applying for any type of loan or best credit cards in India.
