A CIBIL credit score is a 3-digit representation of an individual’s credit history and creditworthiness. It typically ranges from 300 to 900, and reflects the types of credit lines an individual has obtained, as well as their repayment status.
Different loan types have different minimum expected CIBIL scores. For instance, a home loan is considered to be a secured loan, so a borrower can qualify for one even with a relatively low CIBIL score. Here are the CIBIL scores typically required for the most common types of loans.
Type of loan |
Required CIBIL/Credit Score |
720 and above |
|
650-749 |
|
600-700 |
|
750 and above |
|
Education loan |
750 and above |
Car loan |
600 and above |
However, it should be noted that these requirements are not absolute: different lenders may have different criteria and requirements for loan approvals.
1. Better access to credit cards and loans
A good credit score reflects your ability to manage your debt and credit. This can boost lenders' confidence, giving you better access to loans and credit cards.
2. Lower interest rates
Having a good credit score can help you access lower interest rates on loans.
The interest rate is typically tied to your credit score. A good credit score can help you obtain the best interest rates, thereby lowering your overall credit charges.
3. Quick approvals
A high CIBIL score indicates that you are a financially stable and responsible borrower, which means you have an excellent chance of getting quick approvals for a loan (T&C may apply).
Typically, lenders look to provide loans to individuals who have stable credit scores. In some cases, a good CIBIL score might also speed up your paperwork and formalities.
4. Save on insurance
A good credit score can help you get better insurance deals. Insurance companies use various methods to determine whether someone is eligible for certain policies based on their level of risk. If they know that someone has paid off all of their dues, they might offer them a lower premium than they otherwise would have.
5. Approval for high credit limits
Generally, your repayment capacity directly affects your credit score and creditworthiness. If you as a borrower have an excellent credit history, lenders may be willing to let you borrow more. In other words, a good credit score can help you access higher credit limits.
A decent credit score can easily be maintained by following a few simple rules and perhaps mending a few financial habits. Here are some of the main things you can do to maintain a good credit score.
1. Paying your bills on time
2. Not drawing multiple loans
3. Avoiding late payments
4. Staying below your credit limit
5. Checking errors in credit reports and bills
A CIBIL score above 750 is considered good in India.
By repaying your debts on time and avoiding excessive debt, you can maintain a high credit score.
In your 20s, anything in the range of 600 and above can be considered a fairly decent credit score.
850 is an excellent credit score, and you will need to demonstrate a stellar credit record to attain it.
According to the CIBIL, a score of 550 may be considered low or poor. It may be difficult to obtain loans in such a situation.
700-900 is considered a sound CIBIL score. If you have such a score, lenders will probably have confidence in your ability to repay loans.
A score of 650 can be considered to be close to desirable. However, whether it is good or bad may depend on the lender's perspective.