What is the necessary CIBIL or credit score for obtaining a personal loan?
In India, maintaining a good credit score is essential for securing personal loans and credit cards from lenders. The most widely used credit score is the Transunion CIBIL score, which ranges from 300 to 900, with a score of 750 and above being considered excellent for personal loans by most lenders [1][3][5].
While CIBIL is the most popular credit score, other agencies like Experian, Equifax, and CRIF Highmark also provide credit scores. These scores generally follow the same principle: higher scores indicate better creditworthiness. For instance, a score of 650+ might be considered adequate for secured loans like home loans, but for unsecured loans like personal loans, a higher score is typically preferred [3].
Maintaining a minimum credit score is crucial for getting any type of personal loan or credit card. A high credit score increases the possibility of getting approval for a higher loan amount and at lower interest rates. On the other hand, a lower credit score may require proactive steps to improve it for personal loan eligibility [2].
Your credit score acts as a first reference point for lenders to check your creditworthiness. Regularly monitoring and checking your credit score is essential for maintaining it and identifying any errors that need to be corrected [4]. Diversifying your credit mix can also help improve your credit score [6].
Applying for loans frequently can negatively affect your credit score, so it's important to be mindful of this when considering multiple loan applications [7]. In summary, while 750+ is considered ideal for personal loans, variations exist based on the lender and the type of loan. Other credit scoring agencies in India generally offer similar ranges but may have slightly different criteria.
For example, if you have a credit score between 670 and 749, you may still be eligible for personal loans, but the approval may not be guaranteed, and you might face higher interest rates [3]. On the other hand, if your credit score is equal to or above 700, it is deemed good by lenders who prefer CRIF Highmark [5].
In conclusion, maintaining a good credit score is essential for securing personal loans and credit cards in India. Regularly monitoring and checking your credit score is crucial for maintaining it and identifying any errors that need to be corrected. By following these tips, you can improve your credit score and increase your chances of getting approved for a personal loan at favourable terms.
References: [1] https://www.bankbazaar.com/personal-loan/eligibility/cibil-score-required-for-personal-loan.html [2] https://www.moneycontrol.com/news/business/credit-cards/what-is-a-good-credit-score-for-personal-loan-eligibility-7277771.html [3] https://www.financialexpress.com/personal-finance/personal-finance-news/what-is-the-required-cibil-score-for-personal-loan-eligibility-2022-check-here/2457331/ [4] https://www.investopedia.com/terms/c/creditscore.asp [5] https://www.creditmantri.com/blog/credit-score/what-is-a-good-credit-score-for-personal-loan-approval-in-india/ [6] https://www.financialexpress.com/personal-finance/personal-finance-news/how-to-improve-credit-score-in-india-10-tips-to-improve-your-credit-score/1937871/ [7] https://www.bankbazaar.com/personal-loan/eligibility/factors-affecting-cibil-score.html
Using an emi calculator can help you determine the monthly installments for your personal loan based on the loan amount, interest rate, and tenure. A higher credit score not only increases the possibility of getting approved for a personal loan but also reduces the interest rate to be paid on the loan, thus resulting in reduced monthly payments [2].
Furthermore, investing in mutual funds can have a positive impact on your credit score over time, as it shows a responsible approach towards managing your finances and repaying debts consistently [6].
