A Personal Loan helps you meet expenses when you lack funds. You may need money for an emergency hospitalisation of a family member or you may want a loan to fix the damp ceiling in your living room. Perhaps the education loan will not cover your hostel expenses. Whatever your reason may be, a good CIBIL score could speed up the loan approval process. This raises a key question: What is the CIBIL Score for Personal Loan?
What is a CIBIL score?
A CIBIL score is a credit score. It is a three-digit numeric summary of your credit history. Your CIBIL score plays a critical role in ensuring approval for a loan or a credit card.
The range of the CIBIL score is from 300 to 900. The closer you are to 900, the more lenders tend to trust you. So, a higher score betters the chance of approval for your loan application. The score itself depends on your credit history, as found in the credit information report (CIR).
Anything above 700 is a good score while applying for a personal loan. This is true for banks like HDFC and ICICI, as well as for financial institutions like Bajaj Finserv.
CIBIL Score Required for Personal Loan
The minimum CIBIL score for getting a hassle-free Personal Loan is 750. A score above this is proof of your creditworthiness. The higher the score, the higher is your chance of getting a loan and a good interest rate.
Personal Loan for Low CIBIL Score
A low CIBIL score does not mean you cannot get Personal Loans. Peer-to-peer lending helps you get a Personal Loan without CIBIL score entering the scene. Peer-to-peer lending companies look at the whole picture to assess whether you deserve a loan or not.
Also Read : How to Improve CIBIL Score?
Personal Loan without CIBIL Score
Having no history of loans or credit cards means you have no CIBIL score. This does not mean you cannot get a loan from the likes of ICICI or Bajaj Finserv. It just means you are new to the credit market.
How to Calculate CIBIL Score
Your CIBIL score is calculated based on the following factors:
- Your loan repayment history, which accounts for 35% of the score
- Your total available credit balance
- How long you have used credit
- Fresh credit you may have taken or applied for
- Your credit mix—that is, a mix of secured and unsecured credits
- A good balance between your secured and unsecured loans
- The number of loans and credit cards you have
Minimum CIBIL Score for Credit Card
Each credit card company has its own criteria for approving applications. A CIBIL score in the range of 700 to 750 and above qualifies you for a credit card. Such scores signify financial discipline and a good repayment history. Credit card companies prefer such low-risk borrowers.
You may get a credit card even if your CIBIL score is low. But the credit limit will be low as well. Meanwhile, the interest charged may be higher than for people with a better CIBIL score.
No CIBIL Check
In some cases, credit companies may not check your CIBIL score. But you will need to provide collateral and have a steady income. Such a loan may charge a high interest rate.
To sum up, a CIBIL score is important for getting a Personal Loan. If you seek credit sparingly and use credit cards smartly, your CIBIL score will look better. Follow this thumb rule and you will never have a problem getting approval for a loan.