What is the Minimum CIBIL Score Required for Personal Loan?

You can take a loan for any reason, be it a wedding, education, health, or housing. So, before you apply for a loan, understanding your maximum loan eligibility is a must both for you and your lender. A CIBIL score stands as an essential factor for measuring a person's creditworthiness. Lenders consider your CIBIL score when you apply for a personal loan. Now, there might be many questions in your mind regarding what a CIBIL score is, what CIBIL core is considered suitable for loan approval, etc. All you have to do is read this blog till the end as you can find all the information you need here.

What is a CIBIL Score?

A CIBIL score or credit score is a 3-digit number that shows a person's creditworthiness. This score determines a person's eligibility for getting multiple financial aids, including a personal loan

It ranges between 300 and 900. A higher credit score is often a representation of good creditworthiness.

Importance of Credit Score

A high credit score usually comes with the following benefits:

• High Chances of Loan Approval: Your loan or credit card application stands a high chance of approval if your CIBIL Score is high.
• Lower Interest Rates: A good credit score also helps you in getting loans at a lower interest rate from lenders.
• Access to Pre-approved Loans: Your chances of accessing pre-approved loans increase if you possess a high CIBIL score.

Read also: 5 Tips to Improve CIBIL Score

What is the Minimum CIBIL Score Required for Personal Loan Approval?

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

1. Excellent (750 and above): The best opportunities for a loan approval belong to candidates who have CIBIL scores above 750. The most favourable interest rates, along with the loan conditions, become available to them after approval.

2. Good (700 to 749): A personal loan remains accessible to you with a CIBIL score within the good range (700 to 749). Your acceptable CIBIL score allows you to receive competitive loan offers, although you may not reach the lowest possible interest rates.

3. Fair (650 to 699): Although a fair CIBIL score would allow you to obtain personal loans, you might face increased interest rates with more demanding terms attached to the loan. 

4. Poor (Below 650):  The search for personal loans through traditional banking institutions becomes extremely complicated when you have a CIBIL score rating less than 650. The low credit score establishes challenges when pursuing a loan, so you will need to research alternative funding sources or attempt to boost your credit score before applying for a financing option. One can obtain personal loans by applying to NBFCs, including Faircent and Credifyn, despite having a lower-than-average CIBIL score.

Can You Get a Personal Loan With a Low CIBIL Score?

While it is difficult to get a personal loan with a low CIBIL score, you might be happy to know that there are still chances of you getting one. The process might be a struggle, but you still get options like a personal loan for bad credit that are specifically designed to help you in such situations. If you want to avail a personal loan with bad credit, here’s how you can do it:

• Research those lenders who offer loans for bad credit. 
• If you have a bad credit score, lenders might not approve big loan amounts, so apply for a smaller amount only.
• If you add a co-guarantor to your application who possesses a strong credit profile, your chances of approval might increase.
• If you provide property, fixed deposit, or any other asset as collateral, your chances of loan approval increase. This is because giving collateral reduces the risk for the lender.

How CIBIL Score Affects Loan Terms

Summing Up

Although CIBIL score is a critical factor, lenders also consider other aspects of your financial profile, such as your income, employment stability and the loan amount you are requesting. Some lenders have flexibility in their eligibility criteria, while others have strict requirements. However,  My Mudra offers hassle-free loan approval, too, with a low CIBIL score. You can get all types of loans with My Mudra with minimal documentation, sorting out your financial needs.