If I have a good credit score, will I surely get a loan or credit card?

Credit History

A good credit score alone does not mean a person will get the loan he wants. Lenders additionally look at the status of previous loans and the repayment history on such loans. A previously settled or a written off loan is likely to impair the ability to avail more loans. Credit history, outstanding loan value, loan types, recent credit events, etc. affect one's credit score.

A good CIBIL score is necessary for a successful processing of your loan or a credit card application. A good CIBIL score shows potential lenders that you are a reliable customer. But if you have a good CIBIL score, it does not mean that you are loan eligible. A good CIBIL score can carry you far, but there are a few factors which you might still not get your credit card and loan approved.

The major reasons why your loan gets rejected even if you have a good CIBIL score:

  • Imbalance between income and expenditure: It is not necessary that you must have a job to get a loan or a credit card. But when you are requesting to borrow, you income matters a lot, because you must generally show some sort of ability to repay. So the more your loan amount requirement, the more your income requirement. Even if you have a good CIBIL score, your ability to repay the loan is a function of your income and hence it is a vital factor.
  • Having too much of debt: Having too much of debt can negatively affect your credit worthiness, especially if you are applying for a mortgage. In this case, lenders look for debt obligations or EMI obligations and they subtract it from your income. The ideal scenario is to have a high CIBIL score and a large monthly income
  • Be sure not to have a lot of unused credit: If you have too much of unused available credit, it is good for credit utilisation rate, but lenders do not like to see this. If lenders see that you have a lot of unused available credit in your credit report, this might lead to rejection of your loan. Before you apply for any new credit, you need to understand your credit report and know where you stand. This can be done by regular monitoring of your Credit report (be it CIBIL, Equifax or Experian)