A personal loan is an unsecured loan that does not require the borrowers to pledge their assets as collateral. Lenders, therefore, sanction loans based on the CIBIL score of the borrowers. Your CIBIL score is determined by TransUnion CIBIL Limited, also known as the Credit Bureau of India. It maintains records of loan and credit card payments. 

A CIBIL score is a three-digit number that ranges between 300 and 900, indicating your credit history. It is one of the crucial parameters considered by lenders to determine your creditworthiness. Therefore, it is necessary to check CIBIL score online before applying for a loan. The higher your credit score, the greater your chances of getting your loan application approved quickly. 

How does your CIBIL score impact your loan application? 

The impact of your CIBIL score varies across different ranges. For instance, if you have a credit score of less than 600, you may struggle to get your application approved. But, if your credit score is more than 800, you are the most trusted borrower in the eyes of a lender. 

Here is how different CIBIL ranges impact a personal loan application: 

  • A CIBIL score between 300 to 549: 

Borrowers whose credit scores are in this range are considered inadequate by the lender. It means that you will find it difficult to get a personal loan. But, if you wish to secure a loan, you will need to convince your lender that you have a stable job, income, tax fillings, and bank balance. 

  • A CIBIL score between 550 to 649:

It is an average range, which means that lenders may consider offering you a loan, but you will have to compromise on the rate of interest that you will receive. You will need to incur a higher interest rate.

  • A CIBIL score between 650 to 749:
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It is considered to be a good CIBIL score range. Your lender will consider your loan application, but to get a lower interest rate, you will have to up your negotiation game. 

  • A CIBIL score between 750 to 900: 

Borrowers having a minimum credit score of 750 or above are perceived as creditable borrowers. It indicates that you will not default on your loan payments, due to which you can avail of quick loan approval, but you can also negotiate to get a lower interest rate. 

So, if you are searching for ‘I need a personal loan’, it is advisable to check CIBIL score online before submitting your application. Also, do not be hopeless if you have a lower credit score. You can take certain measures and improve your credit score over time. 

What if you have a low CIBIL score?

If you have a low CIBIL score and you want to secure a loan, it would be wise to follow the underlying tips to get loan approval or improve your creditworthiness.

  • Maintain a stable income 

Some lenders may consider your loan application if you have a stable and recurring income despite having a low CIBIL score. It is worth noting that your loan approval depends on several factors, such as age, income, credit score, current financial obligations, etc. 

  • Make sure to pay your taxes

Yes, it is true. When you pay your taxes regularly, it gives a good impression of your profile. Lenders may consider approving your loan application based on your tax payments. 

  • Get a guarantor or co-applicant

If you have a credit score lower than 750, you can get one of your family members with a good credit score to be your guarantor or co-applicant for your loan. Your guarantor or co-applicant increases your chances of getting a personal loan with a lower interest rate. 

  • Opt for a lower loan amount
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If your CIBIL score is more than 600 but less than 750, you can still get a personal loan if you borrow a lower loan amount. So, if you desperately want cash to meet your immediate financial requirements, choose a lower loan amount than you intended. Keep in mind that you may have to incur higher interest. 

  • Make timely payments

Making timely payments of your EMI can help you build your credit score. A golden piece of advice would be to choose Electronic Clearing Services (ECS) as a mode of payment so that you never miss any deadline to pay your EMI. 

  • Rectify errors in your credit report

Any error in your credit report could hurt your credit score. Therefore, it is crucial to check your credit report for small errors and rectify them by informing the Credit Bureau. 

In short 

If you want to speed up your loan application process, you will need to ensure that you have a minimum CIBIL score of 750. Any number above that range can also get a lower interest rate.

To check CIBIL score online, you will need to visit the CIBIL web portal or your lender’s website.

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