CIBIL score is one of the most important aspects of Personal Loan eligibility. It is a three-digit number that is used to evaluate your creditworthiness when you apply for a loan. For lenders, it is the first criterion when they check your Personal Loan application.
Hence, the higher your CIBIL score, the better will be your chances of securing an instant personal loan in india. Your CIBIL score not only impacts your loan approval but also shows whether you are a responsible borrower.
What is a CIBIL score?
CIBIL score, or bureau score, is a three-digit number that is calculated based on your financial credit history, credit instruments, ongoing loans, credit mix, etc. The score is assigned and calculated by credit bureaus such as TransUnion CIBIL, Equifax, Experian, CRIF Himark, etc.
CIBIL score is a crucial aspect of Personal Loan eligibility. The table below specifies which credit score is considered good or healthy.
| Credit Score | Creditworthiness | Loan Approval Chances |
| <600 | Not up to the mark | Very low |
| 600-650 | Below average | Doubtful |
| 650-700 | Average | Good |
| 700-750 | Very good | Very good |
| 750-900 | Excellent | High |
As per this table, the best CIBIL score range is between 750 and 900. Even if your CIBIL score is 800, there is a high chance that you will get an emergency Personal Loan approval. If you have a CIBIL score between 600 and 700, the chances of getting approval are moderate. Further, a score below 600 will make it even more difficult to secure a loan and pass for Personal Loan eligibility.
What is the impact of the CIBIL score?
Your CIBIL score reflects your financial habits. Before applying for a loan, ensure that your CIBIL score is higher than 700. CIBIL score or bureau score impacts your loan approval in the following ways:
- You might be able to negotiate on the interest rate being charged on your Personal Loan. Some lenders might offer you a lower rate of interest on your loan.
- A score between 700-900 will increase your chances of getting approval for the loan faster.
- You won’t have to submit extra paperwork and income proof to justify your repayment capability.
- Your credit limit will increase, which means you can take care of more expenses with ease.
- You might be able to get special offers and discounts on your loans.
How to improve CIBIL score?
If your CIBIL score is below 700, there is room for a lot of improvement. You can improve your CIBIL score by practicing healthy financial habits, having a good credit mix, and paying all your EMIs and bills on time. Below are some ways through which you can improve your credit score faster:
- Keep checking your credit report: There are times when your CIBIL score goes down for no fault of yours. This is because of some errors and mistakes in your credit report. Such mistakes bring down your credit score. Hence, it is important to check your credit report from time to time and file for rectification at the earliest.
- Make timely payments: Paying your EMIs on time diligently will help you improve your credit score. It will also make you appear as a reliable borrower to lenders.
- Don’t apply for multiple loans: Try not to submit multiple loan applications as it makes you appear as a greedy and desperate buyer. Besides this, each time you apply for a loan, the lender initiates a hard inquiry on your credit report having a negative effect on your credit health.
- Have a good credit mix: Having a mix of different credit instruments such as credit cards and loans improves your credit profile. This shows that you can handle various payments effectively and eliminates doubts about default.
In conclusion
Your CIBIL score greatly impacts your chances of getting approval for any kind of loan. It is the first thing that lenders check when they receive your loan application for Personal Loan eligibility. Maintaining a healthy credit score within the range of 700 to 900 will improve your chances of securing an emergency Personal Loan. In addition to this, it will also help you get special offers and lower interest rates on your loans in the future.
It is important to keep checking your credit report in case there are any errors. If you find errors, report them to the bureau immediately to get them rectified.
