When you apply for a quick Personal Loan, lenders generally need your credit or CIBIL score for loan approval. So basically, a CIBIL score is a three-digit number ranging from 300 to 900, which reflects an individual’s creditworthiness and repayment history. It is important to remember that there is a minimum CIBIL score for Personal Loan approval, mostly 750 or above. A higher score indicates you have a good credit history and are more likely to repay the loan on time. Therefore, it is important to keep your score healthy to increase your chances of getting approved for a Personal Loan.
How is the CIBIL score built?
The score is calculated based on various factors, including your credit history, repayment behaviour, credit utilisation, and credit inquiries. It takes your credit report, which contains information about your credit accounts, payment history, and credit utilisation ratio, into account. A good credit score is essential to avail credit facilities at favourable terms and conditions, and maintaining a healthy credit score requires responsible credit behaviour over an extended period.
Who decides your CIBIL score?
The CIBIL score is determined by the Credit Information Bureau (India) Limited, commonly known as CIBIL. It is India’s first credit information company, maintaining records of all credit-related activities of individuals and companies.
The CIBIL score is based on your credit history and behaviour, including your credit card payments, loan repayments, credit utilisation, and other related activities. CIBIL collects and evaluates this information from various banks and financial institutions and assigns a score between 300 and 900 to each individual or company. The higher the score, the better the chances of getting a loan or credit card with favourable terms and conditions.
How much score do you need for a Personal Loan approval?
Regarding quick personal loans, the score you need for approval can vary depending on the lender’s specific requirements. Lenders evaluate your application based on important factors, including credit score. A good credit score is usually considered to be around 700 or higher. However, some lenders may have more lenient requirements and be willing to approve loans for borrowers with lower scores.
Other factors such as your income, employment history, and debt-to-income ratio may also be considered. It’s always a good idea to shop around and compare rates from different lenders to find one that fits your specific needs and qualifications.
Conclusion
Maintaining a good CIBIL score helps avail loans at favourable terms and conditions. The minimum CIBIL score for a Personal Loan in India may vary from lender to lender, but most banks and financial institutions require a score of 750 or above. Your credit score is determined by credit history, repayment behaviour, credit utilisation, and credit inquiries. While a good credit score is around 700 or higher for Personal Loans, other factors like income, employment history, and debt-to-income ratio may also be considered by lenders.