Your credit score is a three-digit number between 300 and 900 that gives potential lenders a quick idea of your credit health.
What is the minimum CIBIL score to get a personal loan?
It is generally advisable to have a credit/CIBIL score of 750 or above to qualify for a personal loan. Your credit score is a three-digit number between 300 and 900 that gives potential lenders a quick idea of your credit health. The higher your score, the better are your chances of being approved.
As a first step, lenders typically look for a minimum credit/CIBIL score of 750 before deciding whether to go ahead with processing your application.
What is the role of my credit score in the loan process?
CIBIL collects and maintains records all your credit-related activity with banks, credit card companies and other formal lenders. It gets reports on a monthly basis from these lenders on all your transactions. This includes information on your EMI and credit card payments (including any late or missed payments), balance outstanding, any change to your total credit limit, and all other details relevant to your credit profile.
Based on this data, a complex mathematical formula is used to calculate your credit score. The score is a reflection of your credit behaviour and gives potential lenders a snapshot of your credit-worthiness. If you have a good track record of making all your payments in time and in full, your score will tend to be high. If you have a history of defaulting on payments or using excessive credit, it will have a negative impact on your credit score.
I have a credit score below 750. Will I get a loan?
If your score is between:
300-599 – You will not qualify for a loan. Such a low score is a warning signal to lenders that you do not have a history of good credit behaviour. Most lenders will reject your application right away. It is necessary to take immediate steps to rebuild your credit health and improve your score.
600-749 – Though it is not a high score, you might have a chance of being approved by some lenders. They might be willing to look at other factors that will impact your repayment ability in the future like the stability of your employment, your monthly salary, the extent of your other liabilities. If they think you have the ability to fulfill your repayment burden despite your middling score, your application has a chance of being approved.
750 and above – You have a very good chance of obtaining a loan with such a score. There are several other advantages to a high score: the approval process will be much faster; the loan amount might be larger; you might be able to negotiate a lower interest rate. The whole loan approval process is much simpler.
If you want to apply for a loan and think your credit score might not be good enough, you can approach a professional credit management agency, like CreditMantri. They can guide you on how to improve your score in the most efficient and effective way so that your loan application is approved and you have faster and hassle-free access to credit.