CIBIL Score for Personal Loan

A CIBIL Score is an important factor that measures your creditworthiness. It is taken into consideration by lenders when you apply for a personal loan and other credit products. A personal loan is a type of unsecured loan that has a short or medium term period. It can be taken for several reasons such as for paying off debt, medical expenses and wedding expenses among others.  When you avail of a personal loan, the lender checks your CIBIL or credit score before sanctioning the loan. Credit score is a three digit numerical figure that ranges between 300 and 900 with 300 being the lowest and 900 the highest. A high score depicts a good credit history, whereas a low score determines a low history.

You can do a CIBIL score check online through the website of authorised credit rating agencies like TransUnion CIBIL. Steps to check credit score for personal loan -

• Visit the website of TransUnion CIBIL
• Create your account online and verify your identity
• Pay the required fee and check your CIBIL score instantly. You can also view a detailed credit report along with the score

The factors that affect your CIBIL score are as follows:

• Repayment history

Repayment history means how you have repaid your past and existing loans and credit cards. If there are defaults, the score would be reduced.

• Credit usage

Credit use means how much credit you have utilised against the credit limit that has been allowed to you. If your credit usage is high, your score would be reduced.

• Credit mix

The credit mix means the type of credit that you have availed of, in the past and present. If you have too many unsecured loans, your credit score would be hampered.

• The number of loan applications made

Making too many loan applications at the same time affects your credit score adversely. With every application, there is a hard enquiry on the score which lowers it.

• Credit history

For how long you have been using credit also impacts your score. If you have a limited history, your score might not be very high. However, if you have a long history and timely repayment record, your score would be good.

There are various ways in which you can improve your credit score. These ways are as follows:

• Always repay your loans and credit card bills on time
• Do not make too many loan applications at the same time
• Keep your credit utilisation limited
• Build a long credit history
• Have a healthy mix of secured and unsecured loans in your portfolio
• Don’t opt for loan or credit card debt settlement

A high CIBIL score is always recommended if you are in the market for a loan. Here are 5 reasons why:

1. Easy availability

Firstly, with a high credit score you can get a loan easily. All lenders offer loans to borrowers with a high CIBIL score.

2. Quicker approvals

The loan application is processed quickly and you can get the funds at the earliest if you have a high score.

3. Better interest rates

Lenders allow interest rate negotiations so that you can get lower rates when you have a high credit score.

4. Higher loan amounts

Personal loan eligibility depends on your credit score. With a good score you become eligible for availing of higher loan amounts for your financial needs.

5. Get pre-approved offers

Pre-approved loans are allowed by lenders based on your credit score alone. You can avail of these offers when you have a high credit score.

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