Lenders therefore look at your credit score and credit report to evaluate if you are a responsible borrower.A credit score ranges from 300 to 900. A borrower should have a minimum score of 750 in order to be eligible for a loan.
WHAT SHOULD BE THE CIBIL SCORE FOR PERSONAL LOAN?
How important is a CIBIL credit score in order to apply for a personal loan? Your CIBIL score is one of the most important factors in being approved for a personal loan. This is because personal loans are unsecured loans (do not require collateral) and are generally more risky for banks than home loans or auto loans - which have the home or vehicle as collateral. Lenders therefore look at your credit score and credit report to evaluate if you are a responsible borrower.
A credit score ranges from 300 to 900. A borrower should have a minimum score of 750 in order to be eligible for a loan.
What are some of the other factors influencing sanction of a personal loan?
Before sanctioning of the personal loan a lender looks also looks at the annual income of the borrower, profile of the company, current loan commitments, among other factors.
What can I use my personal loan for?
This personal loan can be used for any reason. All personal expenses a person wants to make can be made available by applying for a personal loan. This could vary from wedding expenses to hospital expenses or home renovation or even a vacation. There is no restriction on how you use the loan amount.
What are the interest rates?
The interest rate for personal loans varies from lender to lender. In general, interest rates on personal loans are some of the highest among all kinds of loans since there is no collateral that can be used by the lender in case of default. Other factors that influence the interest rate are also the credit history of the borrower and the amount that is being borrowed.
I have a low CIBIL score. What should I do to improve it?
• Make all your EMIs and credit card payments on time, and in full.
• Always keep your balances low. Do not spend more than 50% of your total credit card limit.
• Review your credit history periodically by obtaining a copy of your credit card, so that you are aware of your credit situation and take steps to improve it
Therefore, while there is no fixed minimum CIBIL score to apply for a card, it is recommended that you ensure that you have a score of at least 750 before you apply for a card. If you have a low score, there is a high chance that your application will be rejected, and each rejection causes your credit score to drop even further.
If you want to improve your credit score, you could approach a professional credit management company, like CreditMantri, that can help you obtain your credit report, analyse it and suggest specific ways in which you can improve your score so that you become loan-eligible. Using the services of a reputed company to improve your credit health will help you avoid rejection, and allow you fast and hassle-free access to credit in the future as well.