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CIBIL™ is one of the four authorized credit bureaus in India which provide a credit score, the others being Equifax, Experian and CRIF High Mark.

You know it is time to buy a new vehicle, but you have one thing holding you back, your CREDIT SCORE. However, you are not sure for what credit score is required to buy a car. There is no fixed minimum score for getting a loan. In general, it is advisable to have a score of 750 or above to stand a good chance of being approved. The CIBIL™ Score ranges from 300 to 900 and the higher your score, the better your ability to get a loan.

Can I get a loan without a CIBIL™ Score?

Yes, you can get a loan without a CIBIL™ Score but it is a longer and more difficult loan-approval process. Moreover, you might be offered unattractive terms and conditions on your loan such as a higher interest rate or shorter repayment period. However, with a good CIBIL™ Score, you can get a lower interest rate, longer repayment period, larger loan amount and simpler documentation.

If you have a poor credit score, it is still possible to avail of a car loan as the banks hold the car as security collateral until you repay the full loan amount with interest.

How can I avoid a bad CIBIL™ Score?

A bad CIBIL™ Score arises for the following reasons:

Late or missed payments : If you make any delay in payments towards either credit cards or loans, it causes a negative effect on your CIBIL™ Score.

Exceeding credit limit : Using up the whole credit limit that is provided to you is a sign that you are not disciplined about spending. Make sure that you do not use more than 50% of your total credit limit. This will have a positive impact on your score.

Rejected loans : If your loan has been rejected, do not apply for another loan immediately, because there is a high chance that the second loan will be rejected as well. Each loan rejection causes a drop in your credit score. Improve your credit score first until you are loan-eligible, and then apply for the loan again.

While there is no fixed minimum CIBIL™ score to apply for an auto loan, it is recommended that you ensure that you have a score of at least 750 before you apply to avoid potential rejection.

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8 Jul 2020

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