What is the Minimum CIBIL Score for Personal Loan

When you apply for a loan, your CIBIL score plays an extremely important role. It impacts your loan approval, the interest rate offered and your credit limit.

Loan companies perceive your creditworthiness by reviewing your CIBIL score. CIBIL score becomes even more important when you apply for an unsecured personal loan. This is because you don’t have to pledge any collateral to borrow money. A higher CIBIL score will establish you as a less risky borrower and you will get personal loans at a competitive interest rate.

What is a CIBIL Score?

A CIBIL score is a three-digit number that is calculated on the basis of your credit behaviour. It ranges from 300-900. In simple words, your CIBIL score is an indicator of your past credit behaviour.

Different lenders have different scoring models. Generally, individuals with a CIBIL score above 700 are considered responsible borrowers. Let’s see how credit score ranges are perceived by lenders

Credit ScoreRange
NA/NH“Not Applicable” or “No History”
300-549Low
650-749Good
750-799Very good
800-900Excellent score

Also Read: How Can You Get a Personal Loan for a CIBIL Score of 550 to 600?

What is the Minimum Cibil Score for Personal Loan?

Different banks and NBFC Personal loans have different criteria for approving loan applications. A minimum CIBIL score is a threshold below which lenders don’t give a loan.

For example – If a lender has a minimum CIBIL score criterion of 650 and your CIBIL score is 640, your loan won’t get approved.

If you find yourself in a situation where you are not getting loans due to a low CIBIL score, you should immediately start taking the necessary steps and increase your cibil score.

The Ideal CIBIL Score to Get a Personal Loan

Your CIBIL score is based on factors like your credit utilisation ratio, personal loan repayment track record and length of credit history. Although different lenders have different criteria for loan approval, a CIBIL score above 700 is generally considered a good score.

High CIBIL Score

The maximum CIBIL score a person could have is 900. If your credit score ranges between 750-900, you are considered as a less-risky borrower.

Low CIBIL Score

Generally, a score below 600 is considered a low credit score. You would find it difficult to get a lender that would give you a loan if you have a low CIBIL score. 

Also Read: Good Cibil Score

Why Should You Maintain a High CIBIL Score

When you maintain a good CIBIL score, lenders think of you as a trustworthy borrower. As a result, you could enjoy the following benefits –

Lower Interest Rate

If you have a good CIBIL score, you can avail loans at lower interest rates since lending you money is considered less risky.

Higher Loan Eligibility

Since individuals with a good CIBIL score are low-risk borrowers, lenders feel comfortable offering them a higher loan amount. 

Better Chances of Loan Approval

A higher CIBIL score proves responsible financial behaviour and hence, it significantly increases the chances of loan approval.

Factors that Affect Your CIBIL Score

  1. If you make your EMI payments on time, your CIBIL score increases as it indicates positive credit behaviour. Whereas, late repayments or missed EMIs will negatively affect your score.
  2. A higher credit utilisation of your credit card on a regular basis could bring down your credit score. 
  3. Applying for loans or credit cards with multiple lenders at the same time could also negatively affect your CIBIL score as it shows credit-hungry behaviour.
  4. An error or inaccuracy in your free CIBIL report can also negatively impact your CIBIL score.

How to Improve a Low CIBIL Score

It is extremely important for your financial well-being to have a good CIBIL score. Start following these tips immediately to move up your CIBIL score needle –

  1. Pay all your EMIs on time. This will definitely increase your credit score as it shows responsible financial behaviour. To ensure that you never forget to pay an EMI on its due date, you can set up reminders or auto-debit.
  2. Never apply for multiple credit cards or loans in a short span of time.
  3. Keep your monthly credit card utilisation around 30%. 
  4. Develop a habit of checking your credit report on a regular basis.  

Also Read: How to Improve Cibil Score?

Alternative Lending Options for Individuals with Low CIBIL Score

If you are finding it hard to get a personal loan approval due to a low CIBIL score, you can try out these alternatives –

1. Apply for a Secured Personal Loan

Since pledging collateral reduces risk for the lender, you will find many loan companies willing to lend you money if you are ready to provide a security against the loan.

2. Apply with a Co-Applicant

If you don’t meet the criterion of minimum cibil score for loan, you can get personal loans by applying with a co-signer or guarantor. Your co-applicant should have a good CIBIL score.

3. Don’t Apply for a Higher Loan Amount

To build your CIBIL score and increase your chances of loan approval, apply for a smaller loan amount. 

Also Read: Short Term Loan

Conclusion

A good CIBIL score works as a facilitator towards achieving your financial goals. Lenders think of individuals with good CIBIL as more trustworthy borrowers and give good deals on credit products.

If you have a low CIBIL score, you should take all the necessary measures to improve it. 

If you want to avail a personal loan, you can check your loan eligibility with Zype in less than 8 minutes. Just download the app and enter these basic details – name, mobile number, PAN and employment information. Your credit line offer will be generated in less than 60 seconds.

Frequently Asked Question

Can We Take Personal Loan For 15 Years?
No, personal loans have a shorter repayment tenure. The maximum number of EMIs on your loan is up to 60 months.
Do I Need Good Credit for Both Personal Loans And Home Loans?
While many lenders offer personal loans and home loans to those customers who are new to credit or have a score below 700, a good credit score can get you a high loan amount at a low-interest rate.
Can You Take a Personal Loan To Pay Down Payment?
Yes, you can. You can use your personal loan anywhere you like because they are usually unsecured loans.
When should I Choose a Home Loan Over a Personal Loan?
If you need money to buy a house or a property, choose a home loan. But if you have money very quickly for things like a down-payment on your house, wedding expenses, education fees, etc. it is better to choose a personal loan.
What Factors should I Consider When Deciding Between a Personal Loan And a Home Loan?
The most important factor you should consider when deciding between a personal loan and a home loan is the purpose of your loan. Other than that, there are also factors like the interest rate, loan amount, EMIs etc. that you should consider.