CIBIL Score for Personal Loan

CIBIL score is a 3 digit number that ranges between 300 and 900. To be eligible for a personal loan, most lenders require borrowers to have a credit score for personal loan closer to 900. Having a score of 750 or above is considered a good CIBIL score for loan and helps you get better deals on personal loans.

Minimum CIBIL Score for Personal Loan

The minimum CIBIL score for personal loan required by most lenders is 750 (700 for some lenders) or above. This requirement may vary from lender to lender and the type of loan. For secured personal loans, the minimum CIBIL score for loan can be much lower. The score should be closer to 900 to improve your chances for personal loan approval.

Lenders have to be sure about your ability to repay the borrowed loan before approving your loan application and your credit score helps them assess your risk of default. Having a high score suggests you are a responsible borrower and have paid your past loan EMIs and credit card bills on time. A low CIBIL score for personal loan usually increases your risk for defaulting on a loan.

Personal Loan for Low CIBIL Score

Even though it is a bit challenging, you can still avail of a personal loan for low CIBIL score by following the tips given below:

Show proof of income to serve loan repayments. Don’t hide a hike in salary, bonus or any additional income source. However, do note that low CIBIL personal loan often comes with a higher rate of interest.

Consider applying for a lower loan amount. That is because lenders may perceive you as a high-risk candidate when you ask for a high loan amount with a low credit score. If the amount is lower, the lender may approve the loan request. 

Apply for a low CIBIL loan with a co-applicant. If you have a poor CIBIL score, getting a co-applicant with a good credit score can help you get the loan faster.

  • Resolve and rectify errors (if any) in your credit report. Such errors can lower your score without you even knowing it. 
  • Request your lender to consider your application with an NA or NH remark in your credit report. NA and NH represent an inactive credit period and absence of any credit period in the past 36 months respectively. Some lenders may offer instant loan without CIBIL. 
  • Getting a personal loan without CIBIL or even with a not-so-impressive score is not possible. You can look out for other options, like collateral or secured personal loan against your savings, gold, shares, mutual funds and other valuables. You can also opt for Peer-to-Peer or P2P lending, apply jointly with your parent or spouse, or even get a credit card.

Factors Affecting CIBIL Score Impact on Personal Loan

  • Repayment history and track records of previous loans and credits: If you have defaulted repayment towards your loans or credit cards, it is an indication that you do not have the means to make regular payments. This reduces your creditworthiness and results in a low credit score. In this case, your chances of getting an unsecured Personal Loan reduce as most lenders do not approve personal loan for CIBIL defaulters. You may be able to look at alternatives like a loan against property to fund your financial emergencies. This can result in not being able to get an instant loan on CIBIL score.
  • Credit utilisation: Credit utilisation means how much of the available credit card limit you are using. For instance, if you have a credit limit of Rs. 1 Lakh and you use Rs. 50,000, the credit utilisation ratio is 50%. This helps keep the CIBIL score range for personal loan high and in turn, increases the chances of getting an approval on the Personal Loan.
  • Too many credit cards or constantly increasing credit card limit: An individual with too many credit cards or one who has the habit of increasing the credit limit frequently is categorised as a credit hungry individual. This is an indication of poor spending habits, which reduces the chances of getting a Personal Loan or requires you to pay a higher rate of interest as you are considered a high-risk borrower.
  • Multiple loan applications: This is yet another indication of a credit hungry individual. If a person is credit hungry, it means that they do not have adequate financial sources to fund the necessary expenses. As a result, repayments on the sanctioned loan may also default. As a result, the approval on a Personal Loan is also affected.
  • Too many unsecured loans: For most banks, multiple unsecured loans are an indication of poor financial management or lack of necessary sources for expenses. This not only lowers the credit score but also affects the chances of the person getting approval on another unsecured loan.

Simple Steps to Improve CIBIL Score

The best CIBIL score for loan is usually above 750. To increase your chances of getting a Personal Loan, the first step is to improve your credit score. This can be done with the simple steps mentioned below:

  • Make sure that you make all repayments towards loans and your credit cards on time. Most lenders reject offline as well as online loan for CIBIL defaulters.
  • If you are applying for a new loan, it is a good option to settle an existing loan to improve your credit score.
  • Before you apply for any loan or credit card, make sure that you have narrowed down your options. Multiple applications lead to lower credit scores.
  • Maintain a good balance between your secured and unsecured loans.
  • Avoid applying for credit cards unnecessarily.
  • Do not increase the credit card limit too often.
  • Making use of cash withdrawals on your credit card too frequently is an indication of a poor financial condition and shows that you do not have enough income sources.

Kotak Personal Loan Festival Offer 

Ahead of festival season, Kotak Mahindra Bank has announced Rs 999 flat processing fee offer on Personal Loans. Customers can avail of instant approvals on personal loan applications up to Rs. 20 Lakhs at lowest interest rate starting at 10.25% p.a for maximum of 5 years. 

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CIBIL Score for Personal Loan FAQs

What should be the credit score for a personal loan?

Credit score requirement for Personal loans differs from lender to lender based on different types of criteria. Most banks require customers to have a CIBIL score of 700 or above. However, in case of balance transfer and debt consolidation requests, some lenders may lower their CIBIL score requirement while compensating it with the rate of the interest charged from the customer. 

What if you don’t have a CIBIL score?

If you don’t have a CIBIL score, banks will be reluctant to accept your personal loan request. In such cases, customers can avail a loan from a cooperative bank, private lender or some online lenders. You can also approach the bank with which you have a long banking relationship. However, it is always useful to build and maintain a good credit score as other available alternatives may involve a higher rate of interest. Customers with zero score can also apply for a secured loan against any asset, such as gold, property, deposits, etc.

What is the minimum CIBIL Score required for taking a Personal Loan?

Minimum CIBIL score for loan approval differs from lender to lender based on different types of criteria. Most banks require customers to have a CIBIL score of 750 or above. Some may even offer a personal loan for CIBIL score of 600. However, in case of balance transfer and debt consolidation requests, some lenders may lower their CIBIL score requirement while compensating it with the rate of the interest charged from the customer. Some lenders offer personal loan without CIBIL score or even a loan on low CIBIL score.

Here are CIBIL score requirements of some banks: 

  • Minimum CIBIL score for personal loan in HDFC Bank is 750 or higher.
  • Minimum CIBIL score for personal loan in SBI Bank is 700 or higher.
  • Bajaj Finserv CIBIL score for personal loan is minimum 750.
  • Minimum CIBIL score for personal loan in Axis Bank is anything above 750.

Can I get a Personal Loan without CIBIL Score?

If you don’t have a CIBIL score, banks will be reluctant to accept your personal loan request. In such cases, customers can avail a loan without CIBIL from a cooperative bank, private lender or some online lenders. You can also approach the bank with which you have a long banking relationship for a loan without CIBIL score. However, it is always useful to build and maintain a good credit score as other available alternatives may involve a higher rate of interest. Customers with zero score can also apply for a secured loan against any asset, such as gold, property, deposits, etc.

How to apply for a Personal Loan if I have a low CIBIL score?

If you have a low CIBIL score, you can either wait and improve your score before applying for the loan or avail loan for low CIBIL score with a much higher interest rate. However, the former option is much better than getting caught in the financially draining circle of a large amount of debt. Don’t forget to check CIBIL loan eligibility of the lender before applying for the loan.

Can I get a personal loan if my CIBIL score is 650?

The minimum CIBIL score required for personal loan is 750. If you have a CIBIL score of 650, you can consider applying for secured personal loans against property, deposits, mutual funds, shares, LIC policies, or other assets. The choices of personal loan for CIBIL score of 650 are limited.

My CIBIL score is 600 can i get personal loan?

If you have a score of 600, you can apply for NBFC personal loan for low CIBIL score, secured personal loan, or short term loan without CIBIL. Make sure you check CIBIL score loan eligibility of the respective lender before applying for the loan.