CIBIL Score for Bike Loan

Minimum CIBIL Score for a Bike loan

As mentioned above, your CIBIL score can range between 300 and 900, the higher number being better. A credit score of 750 or above is considered good and is usually sufficient to get most loan applications approved. However, since a bike loan is a secured debt, you can get approval even if your CIBIL score is in the range of 650 to 700. Notably, it is not just your CIBIL score that decides your eligibility for a bike loan, banks and NBFCs almost always consider many other details on your credit report such as how many loans/credit cards you already have, if you have delayed your payments in the past, what is your debt to income ratio, etc.

Why is CIBIL Score Important for a Bike Loan

Your CIBIL score is a three-digit number ranging between 300 and 900 that indicates your creditworthiness. CIBIL score is calculated by TransUnion CIBIL, which is the most trustworthy credit bureau in the country and is based on your credit history including your repayment record, credit utilisation ratio, number of active and closed loan accounts, etc. Whenever you apply for a bike loan, the card issuer always checks your CIBIL score to make sure that you would be able to pay your bike loan EMIs in a timely manner. It, therefore, becomes imperative to maintain a good CIBIL score and a clean credit history if you want your bike loan application to be approved easily.

How Your Credit Score Impacts Your Eligibility for a Bike Loan

Your CIBIL score directly impacts the odds of approval of your bike loan application. The higher your CIBIL score, the more likely it is that your bike loan application would be approved. You may refer to the following table to get an idea of how the likelihood of approval of your bike loan application directly depends upon your CIBIL score:

How to Improve Your CIBIL Score for a Two Wheeler Loan

You can easily improve your CIBIL score by incorporating good financial habits. Given below are some of the key financial habits that you must stick to if you wish to improve your CIBIL score:

• Pay Your Dues on Time: This is the single most important financial habit to incorporate for a healthy CIBIL score. You must be punctual with regard to the repayment of loans and credit card bills.

• Regularly Review Your Credit Reports: It is advisable to keep tabs on your active and closed loan accounts and have a good understanding of your credit report. In case you notice any error or discrepancy, you must flag the same to CIBIL immediately.

• Avoid Frequent Loan/Credit Card Applications: Whenever you apply for a loan/credit card, the bank/NBFC requests your credit report and credit score from CIBIL. Such requests are known as hard enquiries and have a negative impact on your CIBIL score. It is, therefore, advisable not to apply for too many credit cards or loans within a short span of time.

(Note: If you check CIBIL score through Bajaj MARKETS, it counts as a soft enquiry and has no negative impact on your credit report.)

• Maintain Low Credit Utilisation: You should avoid exhausting the entire credit limit of your credit card as it reflects poor financial behaviour. Experts suggest that you should ideally not exceed 30% utilisation of your card’s credit limit.

• Have a Good Mix of Secured/Unsecured Loans: A healthy mix of both secured and unsecured loans in your credit profile shows that you have the experience of handling both types of loans and are, therefore, more creditworthy. Personal loans and credit cards are unsecured in nature, while home loans and auto loans are secured loans.

Things to Keep in Mind Before Applying for a Bike Loan

• Credit Score: Before you apply for a new bike loan, make sure that you have a healthy credit profile. Ideally, you should apply for a bike loan when your CIBIL score is at least 750 or above as applying with a low CIBIL score may result in rejection of your bike loan application.

• Debt to Income Ratio: You must also make sure that you do not borrow more than what you can repay.  A high debt to income ratio also has a negative impact on your CIBIL score. A debt to income ratio between 20% and 35% is usually considered good.

Avoid Frequent Applications: In case your bike loan application is declined, it is advisable to wait for at least six months before reapplying. Too many credit enquiries within a short span of time indicate that you are credit hungry and have a negative impact on your CIBIL score.