What’s The Ideal CIBIL Score for a Personal Loan?

A personal loan is one of the most widely used financing methods that aid millions of individuals through tough times. The funds obtained via this loan offer you thorough freedom in the usage of money. However, the CIBIL score may obstruct your financing journey when placing an application for a loan. In case you are unfamiliar with the terminology or not sure of the minimum CIBIL score for personal loan required, read this article. 

What’s a CIBIL score?

CIBIL refers to the Indian credit information bureau. It is approved by the RBI, whose major function is to evaluate the credibility of the borrowers. CIBIL is India’s one of the most vital credit bureaus, helping financial institutions in risk assessment of the applicants. CIBIL’s functionality is dependent on the data that is shared with them by different financial institutions, various data collection agencies and different similar organizations. CIBIL score is a crucial factor that the lenders factor in when endowing the loan. Thus, it is always recommended to maintain at least the minimum CIBIL score to avail of the personal loan. 

However, many often confuse the CIBIL with the CIBIL score. In actuality, both the terms are just interrelated. However, their meanings are different. So, what’s the exact meaning of a CIBIL score? Find out here. 

What’s the CIBIL score?

A CIBIL score is a 3-digit score which shows your capacity to make payments timely on your credit obligations. Note that the CIBIL score is even sometimes referred to as a credit score. To compute the credit score for a personal loan, credit bureaus factor in the overall debt across the lenders as well as your payment history. This platform demonstrates your credibility in a numeric form that ranges anywhere between 300 and 900. Many lenders require the minimum score to be 750 to be eligible for a personal loan. For instance, SBI personal loan CIBIL score requirement is 750, and the same is for other lenders as well. However, if you are looking to avail a loan easily, your CIBIL score must be close to 900, as it is considered a strong credit score for a personal loan. 

What must be your ideal CIBIL score range for availing of a personal loan?

Many lenders believe that the credit score required for a personal loan must be over 750 for approval of a loan application. However, the minimum CIBIL score for the personal loan equals 750 as it is a loan which is unsecured in nature. An individual with a score of over 750 can obtain a massive loan at a low rate of interest. However, a credit score of below 750 does not mean that you will get a loan rejection. There still is hope to secure the funds from the lender. Let’s go through the credit score ranges to understand them better – 

NA / NH

Do not be surprised if you view this term when checking your score. The letters NA mean not applicable. You may see these letters on your credit report if you have never availed of the loan or used the credit card. 

A credit score between 300 and 550

A credit score ranging from 300 to 550 means a bad credit history. It might happen if you previously defaulted on your debt. Also, it can be the outcome of missed EMIs. With such a credit score, the availing loan becomes impossible.  

A credit score between 551 and 650

A score ranging between 551 and 650 is looked upon as fair. The range shows a delay in paying the EMI. Also, it suggests a habit of raising various loan queries. Applicants with such a low credit score are looked upon as high risk. In case you fall in this range, then you will either be turned down the loan or given approval in exchange for a high rate of interest. 

A credit score between 651 and 750

A strong credit score falls in this range. Holding this number gives a good impression to the lender. It shows your disciplined and responsible behaviour towards repayment and low probability of loan or credit card defaults in future. But while this score might assure you of a personal loan, it does not guarantee a low rate of interest loan. 

Minimal CIBIL score required for a personal loan

Typically, the higher your credit score, the better it is. However, the minimum CIBIL score for a personal loan is 750. This shows you have good experience in managing your credit and will make repayments on time by the due date. 

A credit score between the range of 750 and 800

Credit score over 650 and below 750 falls in the category of good credit score. Holding a long credit score along with a favourable repayment history is important to belong to this category. Holding this credit score ensures you a personal loan at a lower rate of interest. 

A credit score ranging between 800 and 900

It is the best credit score for a personal loan. It is categorized under the excellent category. Having this score shows you an individual with regular EMI repayments, a low credit utilization ratio and strong financial management. Availing of a personal loan on favourable terms and conditions is not difficult with a score like this. 

As lenders are most likely to provide a personal loan depending on your credit score, ensure you repay your loan EMIs and bills by the due date and maintain a strong credit score. Doing so will not just assist you in availing of high loan proceeds but even enable you to avail a competitive interest rate on a personal loan. 

Why is having a minimum credit score for a personal loan important?

∙       Allows you to obtain an amount as per your requirement

∙       Receive suitable terms and conditions and the benefit of a low rate of interest on the loan

∙       Enjoy quick loan approval

What are the important key elements that impact your credit score?

The important key elements that determine your credit score are your credit mix, repayment history, multiple loan enquiries and your credit utilization ratio.