Importance of CIBIL Score for a personal loan

Read on to know more about CIBIL Score, it’s impact on a personal loan, and the ideal credit score needed to obtain a personal loan.
Importance of CIBIL Score for a personal loan
5 min read
03 March 2023

A CIBIL Score is a three-digit number that reflects your credit history and denotes your creditworthiness. It clarifies to the lender whether you are a high-risk or a low-risk borrower.

CIBIL Score is one of the factors used to evaluate when you apply for any credit. It ranges from 300 to 900, depending on factors such as your payment history, credit risk, credit transactions, credit type, and credit period.

A credit score between 300 and 500 denotes poor cash management and can lead to a loan application being turned down. Banks, NBFCs and other financial institutions consider 750 or above as a good score for lending funds to individuals.

And if it is in the range of 750-900, lenders will be more likely to grant you a personal loan without lengthy paperwork. In fact, some financial institutions may also have pre-sanctioned offers for these kinds of customers.

Can you get a personal loan without CIBIL Score?

No, you cannot get a personal loan without a CIBIL Score since that's one of the primary ways that a lender decides if a borrower is creditworthy. As personal loans are unsecured, it is important for the lender to evaluate the risk factor when lending money to an individual. CIBIL Score is a measure of the ability of the borrow to repay the loan amount. Without a CIBIL Score it becomes riskier for lenders to give loans.

Read about credit rating agencies in India

What is the ideal CIBIL Score to get a personal loan?

A CIBIL Score of 750 and higher is ideal while applying for a personal loan with Bajaj Finance Limited. Your credit score is very crucial as it reflects how risky or non-risky you are as a borrower. A higher score will help you get speedy approval on your personal loan application.

What are the benefits of having a CIBIL Score above 750?

Even though your credit score isn't the only thing a lender looks at when you apply for a loan, here are some of the main benefits of having a credit score above 750:

Quick approval: A good credit score implies responsible credit behavior, a solid repayment history, and a decreased risk of default for the lender. All of these factors boost your chances of being approved for a personal loan.
Reduced interest rates: Lenders will offer you personal loan interest rates if you have a good credit score.
Pre-approved loans: A high credit score may also frequently boost your chances of getting pre-approved loans. These offers can help you get credit faster because they usually require minimal paperwork.
Longer loan tenures: A long-term loan typically entails a higher level of risk for the lender. Therefore, if you have a good credit score, you may be able to negotiate for a convenient loan repayment tenure. Long-term loan repayment lowers your monthly credit burden, reduces your EMI payments, and helps you manage your monthly costs effectively.

Check your CIBIL Score for free today.


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