What is the required CIBIL or credit score level for securing a personal loan?
A credit score is a three-digit number, ranging from 300 to 900, used by lenders to measure an individual's creditworthiness. The score is calculated based on various factors such as current outstanding debt, credit utilization, repayment history, and more.
When it comes to personal loan approvals, maintaining a good credit score is crucial. While the exact minimum score required can vary by lender, a score of around 685 or higher across all major credit bureaus improves your chances of approval.
The Role of Credit Bureaus
In India, there are four major credit bureaus that provide credit scores: TransUnion CIBIL, Experian, CRIF High Mark, and Equifax. Each bureau has its own method of calculating the credit score, but they all follow similar criteria.
| Credit Bureau | Minimum Credit Score for Personal Loan | Notes | |-------------------|-----------------------------------------------------|------------------------------------------------------------------------------------------| | TransUnion CIBIL | Minimum ~685; ideal 750+ | Most lenders primarily rely on TransUnion CIBIL scores for loan approvals. | | Experian | Similar range, generally 685+ | Scores range 300-900; higher is better, used alongside others in loan decisions. | | CRIF High Mark | Around 685 or above, but varies by lender | One of the four major bureaus; score range 300-900, similar criteria applied. | | Equifax | Approximately 685+ | Also used by lenders; minimum usually consistent with other bureaus. |
The Importance of a Good Credit Score
A good credit score (750 or above) not only increases the possibility of getting approval for a higher loan amount but also helps you get loans at favourable credit terms, such as lower interest rates and longer loan tenures.
Regularly checking your credit score is important to identify any errors in the credit report. Maintaining a minimum credit score is essential for getting any type of personal loan or credit card from lenders. A high credit score indicates a creditworthy borrower, while a low credit score may be perceived as not creditworthy, potentially leading to loan denial.
Remember, if you don't have a credit score, it will be difficult for you to avail any type of credit in the future. Therefore, it's crucial to establish a credit history by taking out loans (secured and unsecured) and repaying them on time.
In summary, maintaining a credit score around 685 or higher across all bureaus improves your chances of personal loan approval, with 750+ being the benchmark for best offers and terms. A high credit score reflects your creditworthiness to lenders, leading to faster loan approval and lower interest rates.
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As you plan for future financial needs, such as purchasing a house or a car, maintaining a good credit score becomes crucial. Besides personal loans, a high credit score can also improve your chances of getting approved for credit cards with attractive rewards and low-interest rates, providing additional benefits in the realm of personal-finance management.
