There are occasions in life where you need access to additional finance to fulfil your short and long-term goals. While short-term goals may include home renovation and going on a vacation, long-term goals can be buying a home or marriage. A personal loan is an ideal funding option to address these goals. However, prior to lending, financial institutions look at certain parameters to gauge your creditworthiness. CIBIL score is one among them.
Minimum CIBIL score for personal loan
TransUnion CIBIL, one of the India's leading credit information companies, incorporated in 2000, analyses and delivers a three-digit score, between 300 and 900, based on your credit history. The higher the credit score is, the better are the chances of personal loan approval. A score of 685 or higher and above is what is generally considered the ideal CIBIL score for loan approval.
Your score plays an integral role in your financial journey and affects various aspects of lending. Read on to know the importance of CIBIL score, while availing of a personal loan.
Rate of your creditworthiness
Your CIBIL score gives the first impression to your prospective lender about your creditworthiness. It tells them whether you can repay the loan on time or not. While a high score instils a sense of confidence among lenders, a low score raises a red flag. It’s not that you can’t avail of a personal loan with a low credit score. However, it will come with various terms and conditions attached.
Approval of loan application
CIBIL score plays a crucial role in the time taken for loan approval. A high CIBIL score expedites the loan application process Since a high score helps win the trust of your potential lenders, they take minimum time to process your personal loan application. Faster processing of your application ensures quick disbursal of funds into your account, which you can use to address your needs.
Additional Read: How to improve CIBIL score
Competitive interest rate
Before availing of a personal loan, it’s crucial to find out the interest rates. With a high CIBIL score, you stand a great chance of availing a loan at competitive rates of interest. It gives you the power to negotiate with your lender. In fact, some lenders may even waive off the processing and pre-payment charges. On the other hand, a low score tilts the scales in favour of the lender, when it comes to determining the interest rate.
Estimation of loan amount
The amount of loan you can get rests on your CIBIL score. A high score entails a higher amount and vice-versa. It also leads to minimum documentation and ensures a hassle-free borrowing exercise.
Additional Read: Peer To Peer Lending
The CIBIL score ranges between 300 to 900. The closer you are to 900, the better are the chances of your loan approval. Now, you can get a free CIBIL score at Bajaj Finserv at no extra cost. All you have to do is enter your details and access your credit score for free.
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