CIBIL Score for Personal Loan: Minimum Score Required

Before applying for a personal loan, take a few steps to strengthen your credit profile and improve your chances of approval.

Here are some important points to keep in mind:

• Review your credit report for inaccuracies and start correcting errors in your credit report before submitting a loan application.
  

• Clear outstanding dues where possible to reduce your credit utilisation and demonstrate responsible credit management.
  

• Avoid multiple loan applications within a short period, as frequent credit enquiries may negatively affect your credit profile.
  

• Do not reapply immediately after a rejection. Instead, identify the reason for the rejection and address any issues before applying again.
  

• Keep your EMI-to-NMI (Net Monthly Income) ratio manageable, as lenders assess your repayment capacity in addition to your CIBIL score.
  

• Pay existing EMIs and credit card bills on time to maintain a positive repayment history.
  

• Maintain stable employment and income, as these factors also influence loan eligibility.
  

• Check the lender's eligibility criteria before applying to avoid unnecessary credit enquiries.

A low CIBIL score does not always mean you cannot access credit. Depending on the lender's criteria and your overall financial profile, you may still have options.

Here are some steps you can consider:

• Improve your repayment track record by paying all EMIs and credit card bills on time.
  

• Reduce existing debt obligations to improve your credit profile and repayment capacity.
  

• Apply for a smaller loan amount, which may be easier to qualify for than a larger loan.
  

• Add a co-borrower or guarantor, if permitted by the lender, to strengthen your application.
  

• Avoid submitting multiple applications simultaneously, as repeated credit enquiries can affect your credit profile.
  

• Consider secured borrowing options, where approval may depend more on the value of the pledged asset than your credit score.
  

• Explore a gold loan, which is secured against your gold jewellery and may be available even if your credit score is not ideal.
  

• Consider a loan against a fixed deposit (FD) if you hold an eligible deposit, as such loans are secured by the underlying FD.
  

• Focus on improving your score before reapplying if access to unsecured credit is limited.

Bajaj Markets makes it easy for you to determine your credit health before applying for a personal loan. Follow these simple steps to get your score for free:

1. Click on the ‘Check CIBIL Score’ option on this page

2. Enter your personal information, including your name, mobile number, date of birth, personal email ID, PAN details, and Pincode

3. Select your employment type and agree to the terms and conditions

4. Click on ‘GET REPORT’ to receive the OTP

5. Enter the OTP to view your credit score

You can even check your credit score through the official TransUnion CIBIL website.

Improving your CIBIL score is easy when you adopt the right credit habits. These include:

Timely EMI and Credit Card Bill Payments

Pay the EMIs of any existing debts on time to build a good credit history as a responsible and diligent borrower. Follow the same pattern when it comes to your credit card bills. This is the primary way to boost your score.

Extensive Experience with Credit 

By having a mix of secured and unsecured loans and repaying them on time, you showcase good credit management skills. Having an experience with different types of credit products can enhance your credit score. 

Staying Up to Date With Changes in Your Credit Score 

By checking your score and Credit Information Report (CIR) every 3 months or so, you can monitor your credit health better. By analysing changes in your credit score, you can identify issues, such as:

• Mistakes in reporting by financial institutions

• Fake loans in your name 

By reporting these issues and raising disputes when needed, you can increase your score and take better control of your creditworthiness. 

Applying for Credit Carefully

Applying for multiple credit products at the same time can bring your CIBIL score down. This triggers multiple hard enquiries of your credit report by financial institutions and lowers your credit score. 

Instead of trying your luck with various financial institutions, apply for loans and cards only if you are eligible. 

Decreasing Your Monthly Obligations

By reducing your current debt, you can decrease your Debt-To-Income ratio (DTI) and increase your score. The DTI measures existing debts against your income, and a ratio of 35% or below is considered ideal.

While the CIBIL score is one of the major factors affecting your eligibility for an unsecured loan, there’s more to it. Here are some of the other considerations:

• Salary and Total Income

Financial institutions calculate your total earnings, be it from your salary, other sources like rent, or business. A higher income can increase your chances of getting approval on your personal loan application as long as you do not have many existing obligations.

• Debt-to-Income (DTI) Ratio

A lower debt-to-income ratio will help you get a personal loan easily, as it means you have the ability to pay EMIs comfortably. Usually, keeping your DTI to 35% or less when applying for a new loan is ideal. However, this depends on the lender you apply to and its policies. 

• Job and Work Stability

A stable and secure job with a well-established company can help you get faster approval on your loan application. This decreases the probability of you missing EMIs and increases your creditworthiness. 

• Existing Relationship with a Financial Institution

A long and sound history with a bank or Non-Banking Financial Company (NBFC) can increase your eligibility for a personal loan. Since the lender already has information related to your finances and credit profile, the evaluation process is faster. 

• Credit History

Apart from your score, lenders also check your past behaviour with credit. By not carrying forward unpaid balances on credit cards and having a longer length of experience with credit, you can boost your eligibility.

Taking a personal loan can have both a positive and negative impact on your credit profile. If repaid responsibly, personal loans can help enhance your score. 

Here is how your credit score influences your loan and further, how your liabilities impact your CIBIL score:

Impact on Eligibility When You Apply for a Loan

Meeting the lender’s requirements of the minimum CIBIL score for a personal loan is a prerequisite to qualify for financing. Financial institutions use your credit score to assess your reliability and ability to repay the loan. 

Here's how it impacts the way your personal loan application is viewed and the terms you get:

• Loan Approval 

Having a high credit score increases your chances of getting approval on your personal loan application. 

• Interest Rates

With a higher score, lenders are more inclined to offer competitive personal loan interest rates. This can significantly reduce the overall cost of the loan and reduce your EMIs. 

• Loan Amount

A higher score may allow you to borrow a larger sum, while a lower score may limit the personal loan amount you can borrow.

• Favourable Terms

You are more likely to be offered flexible repayment terms if you have a higher credit score. This could include longer repayment periods and more manageable monthly payments.

Impact on Your Credit Profile After Taking a Loan

Regular and timely personal loan EMI payments can steadily improve your score. This can help you get approval for preferred credit cards and loans in the future, possibly with more favourable terms. 

Be it for a medical emergency or for your home renovation, you can get financing across the stages of your life by maintaining a good score. However, taking a personal loan does bring your DTI down, and can decrease your eligibility for a new loan until you repay it. 

Not repaying this loan on time or defaulting on it can also have severe consequences on your credit health. It can hurt your creditworthiness, which makes it difficult for you to get access to funds when needed.