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Minimum Credit Score Required for Personal Loan

We have moved past that age where it was thought that taking a loan was somehow a sign of financial distress. Today, the reverse is true. In fact, you need to be in good financial health to take a loan. That is the reason why credit scores, which denotes our financial health, are very important in securing a loan.

In today’s day and age, we cannot overemphasize the importance of credit scores. From taking a home loan for your dream home or a car loan to buy your favourite car, or an education loan or personal loan, a good credit score not only ensures faster approval but competitive interest rates.

According to ballpark estimates, around 30 crore Indian citizens have a credit history and around 10-15 crore people apply for loans annually. However, only around 30-50 lakh people keep track of their credit score and credit history. Given the importance of credit scores, it is important that you are aware of your credit score and history and regularly run a CIBIL score check.

What is a CIBIL score?

TransUnion CIBIL Limited (Formerly Credit Information Bureau (India) Limited) is one of the four credit information companies authorized by the Reserve Bank of India. Though Experian, Equifax, and Highmark also provide credit reporting services, CIBIL is the most popular credit information company in India. The CIBIL score is a 3 digit numeric status of your credit health summarised by your credit history, rating and report.

Whether you want the right CIBIL score for a personal loan, home loan or car loan, the score is displayed in the range of 300-900. A CIBIL score check denotes your creditworthiness and higher your score, the better are your chances of loan approval at preferential interest rates.

If you are applying for a Bajaj Finserv personal loan on Finserv MARKETS, you get the best deals and offers on personal loans if you have a healthy credit score.

Minimum CIBIL score for a personal loan

Lenders prefer someone with a minimum CIBIL score for loan of 700 and when it comes to the minimum CIBIL score for a personal loan, a score of 750 is preferred since a personal loan is an unsecured loan. Some banks may offer you a personal loan if your CIBIL credit score is below 750, provided you have no negative credit history.

Lenders consider a credit history as negative if you have not made timely repayments in the past or defaulted on loans or credit card payments.

Minimum CIBIL score for loan eligibility and its importance

The RBI allows CIBIL to keep track of all your borrowing and repayment activities with banks, credit card companies and other registered lenders. CIBIL also tracks whether you are making timely repayments or missing the due dates; the amount of credit you are utilizing out of your credit limit; and whether you have increased your credit card’s limit. Additionally, it maintains a record of your loans or credit card applications in the recent past.

All these metrics and parameters impact your credit score and the minimum CIBIL score for loan eligibility. A good credit score should be in the range of 750-900 but lenders may consider you loan worthy even if your credit score is in the range of 650-700, provided you fulfil a few other conditions. For example, if you have a stable job, own a home and have no negative credit history, you may get a loan without meeting the minimum CIBIL score for personal loan.

How to maintain a good CIBIL score?

We have already underscored the importance of a good credit score. But how do we maintain a good CIBIL score? Here are a few hacks.

Don’t miss your EMIs and credit card payments

Pay your EMIs on time and if possible automate the payments to avoid late payment fees and negative impact on your credit score. Use your credit card cautiously and pay the total amount due instead of just paying the minimum amount due every month. If not, your credit card debt keeps on piling and it will affect your credit score negatively.

Check your credit utilization

For good credit scores, don’t utilize more than 30% of your credit card limit. If you have 3 credit cards ensure that you are using all 3 to limit your utilization to 30%. For example, if you have 3 credit cards with a credit limit of Rs. 1 lakh each, you shouldn’t be using more than Rs. 30,000 from each card.

You can also check credit score by pan card

Don’t show that you are credit hungry

Once you have applied for a loan and your application has been rejected, maintain a gap of at least 3-6 months before applying again. Don’t apply for too many credit cards and loans in a short period of time.

Balance secured vs. unsecured credit

Even if you have the minimum CIBIL score for a personal loan, balance your loan portfolio with a secured loan as well. Personal loans are unsecured loans because they don’t require any collateral while home and car loans are secured loans.

Make sure that you are regularly keeping track of your credit score and doing your best to maintain a high credit score. If you are looking for a personal loan, consider a Bajaj Finserv Personal Loan available on Finserv MARKETS and get instant approval for an amount up to Rs. 25 Lakhs with flexible EMI repayment options up to a period of 60 months.

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