What is the Minimum CIBIL Score Required for Personal Loan?

The Credit Score or CIBIL score required for Personal Loan varies from 650-900. A person with a maintained score of 700 or above shall be considered good to avail of the personal loan facility at a low interest rate. A good or maintained CIBIL Score denotes that a person has the ability to repay the loan easily. This is judged from the previous record of his repayment of loans or credit card bills. Anything that you buy with the help of credit cards, or loans can make your credit score. There are many Banks and NBFCs providing offers on loans and credit cards to a person who has a good credit history.

The article is an attempt to make you understand the importance of credit scores in availing of financial services from lenders. Learn about the minimum credit score that a borrower needs to get a personal loan. Get to know about the tips to increase CIBIL score required for personal loan. It shall answer all your queries regarding personal loan CIBIL score or can the borrower get loan for low CIBIL score or not.

Importance of CIBIL Score in Getting Personal Loan

A CIBIL Score is a three-digit number that denotes the creditworthiness of a person. In India, credit score is generated by companies like Equifax, TransUnion, and Experian.

1. Loan Approval: Lenders use your CIBIL score as one of the primary factors to assess your creditworthiness. A high CIBIL score indicates responsible financial behavior, making it more likely for lenders to approve your personal loan application. The approval of low CIBIL score personal loan is a bit difficult as it gives the impression that the borrower shall not be able to repay the loan.

2. Interest Rates: A good CIBIL score can help you secure a personal loan at lower interest rate. Lenders typically offer better terms, including lower interest rates, to borrowers with higher credit scores. When you have the required CIBIL Score for personal loan the lender shall offer low interest rate on the loan.

3. Higher Loan Amounts: If the borrower has maintained personal loan CIBIL score then lenders are more likely to approve larger loan amounts. If you have a low credit score, you may only qualify for a smaller loan or may even be denied a loan altogether.

4. Faster Loan Approval: If you pass the criteria for CIBIL score required for personal loan. Then the process of loan approval can be done quickly.

5. Credit Card Approvals: A good credit score not only affects personal loans but also your eligibility for credit cards and other forms of credit. It can open up access to a wider range of financial products and services.

6. Creditworthiness Perception: A high CIBIL score reflects positively on your financial responsibility and stability. This can be beneficial for various other aspects of your financial life, such as renting an apartment or getting insurance.

Minimum CIBIL Score Required for Personal Loan

The minimum CIBIL score for personal loan can vary depending on the lender and their specific lending criteria. However, to avail of a personal loan in India, lenders prefer applicants to have a CIBIL score of at least 700 to 750 to be eligible for a personal loan.

Here's a breakdown of what different CIBIL score ranges typically signify to lenders:

1. Excellent (750 and above): Applicants who want to take a personal loan have a CIBIL Score with an excellent CIBIL score usually have the best chances of loan approval. They are likely to qualify for the most favorable interest rates and loan terms.

2. Good (700 to 749): A good CIBIL score still makes you a strong candidate for a personal loan. While you may not get the absolute lowest interest rates, you should have access to competitive loan offers.

3. Fair (650 to 699): A fair CIBIL score might still qualify you for a personal loan, but you may encounter slightly higher interest rates and stricter terms. Lenders may also scrutinize your application more closely. You can get low CIBIL score personal loan but the lenders will offer the loan at higher interest rate.

4. Poor (Below 650): Having a CIBIL score below 650 can make it challenging to secure a personal loan from traditional banks and financial institutions. In such cases, you may need to explore alternative lenders or work on improving your credit score before applying for a loan. Personal loan for low CIBIL score is available through NBFCs like Faircent, and Credifyn.

Tips to Increase your CIBIL Score

Certainly, here are some concise tips to increase your CIBIL score:

1. Pay Bills on Time: Ensure timely payment of all credit card bills, loans, and EMIs to avoid late payment penalties.

2. Reduce Credit Card Balances: Aim to keep your credit card balances well below their credit limits. High credit utilization can negatively impact your score.

3. Diverse Credit Mix: Maintain a mix of credit types (credit cards, loans) to demonstrate your ability to manage different forms of credit responsibly.

4. Don't Close Old Accounts: Keeping older accounts open can positively impact your credit history's length.

5. Limit Credit Inquiries: Minimize the number of new credit applications, as frequent inquiries can lower your score.

6. Settle Past Dues: If you have any overdue accounts, work on settling them as soon as possible.

7. Use Secured Credit Cards: If you have a low score or no credit history, consider using secured credit cards to build or rebuild credit.

8. Don't Default: Avoid defaulting on loans or credit cards as it has a severe negative impact on your score.

9. Financial Discipline: Maintain overall financial discipline, including budgeting and saving, to ensure responsible credit management.

10. Limit Credit Extensions: Avoid taking unnecessary loans or credit you don't need, as it can increase your overall debt burden.

Conclusion

It's essential to understand that while your CIBIL score is a critical factor, lenders also consider other aspects of your financial profile, such as your income, employment stability, existing debts, and the loan amount you're requesting. Some lenders may be more flexible in their eligibility criteria, while others may have stricter requirements. My Mudra is one such organization helping you in getting financial aid with loan for low CIBIL score. Get your loan approved hassle-free with less documentation and at low-interest rates. Get all types of loans from My Mudra and accelerate the growth of your life without making finance a hurdle in it.

Also read: Get your Personal Loan Approved with a Low CIBIL Score