What Is The Minimum Cibil Score Required To Get A Loan?
The past few years have observed a drastic increase in the number of people opting for loans. While applying for any type of loan, one of the key parameters that are verified is your CIBIL score. This score is crucial as it helps banks decide the approval of your home loan application. A credit report comprises your CIBIL score that helps banks and financial institutions understand your creditworthiness. This is based on your repayment habits over a period of time. The bureaus typically collect data that includes individual consumers and lending institutions to provide information about your credit history and creditworthiness.
A CIBIL score between 750 and 900 is recommended to borrow credit. The higher your score, the more likely you are to get your home loan application approved. A higher CIBIL score can also help you avail of such as higher loan amounts, lower interest rates, and longer repayment tenure. If your credit score is below 675, it is recommended to improve your credit score before applying for a loan.
Ideal CIBIL Score for a Loan
The ideal CIBIL score varies based on the type of loans such as home loans, home construction loans, business loans, and small business loans. For a personal loan, most lenders have a minimum CIBIL score requirement of 750 as it is an unsecured loan. When it comes to a business loan, the lower limit of the acceptable CIBIL score is between the range of 600 to 700. For a home loan, many lenders require a lower CIBIL score requirement than a personal loan, thereby being in the range of 550-600. While meeting this minimum criterion is important, having a good CIBIL score of 750 or above can help increase the chances of approval of your loan application. In addition to increasing your loan approval chances, having a high CIBIL score can also reduce the typical hassle that comes along with having a low CIBIL score. Moreover, the ease of verification and disbursement can also be improved for individuals with a good or high CIBIL score.
How to Improve Your CIBIL Score?
Improving your CIBIL score can be done in a few ways. By being disciplined and consistent with these steps, you can improve your CIBIl score in no time. Here are 3 ways in which you can improve your CIBIL score.
- Frequently Check Your Credit Report: The first step is to get your credit report and evaluate it for errors and mistakes. Even if you have been paying on time, there can be scope for error which can affect your score negatively. You must ensure that you have been paying your bills on time at least 5-6 months before you apply for a loan.
- Pay Your Credit Card Bills on Time: Before applying for a loan, make sure that you have been timely with paying your credit card bills on time for the past six months. If you are consistently late in paying your credit card dues or are maxing out your credit limit, your credit score can be negatively impacted.
- Be Timely With Your EMIs: To have a good credit score, make sure that you pay your EMIs on loans and mortgages regularly. Running late on these payments can affect your credit score. Banks and lending institutions will look into your credit score to understand your potential repayment patterns. If you have significant debt from other loans, you can consider alternatives such as restructuring your loan.
In a Nutshell
Different loans have a different CIBIL score requirement based on the nature and type of the loan. It can be beneficial to have a good CIBIL score to avoid any hassle during your loan application process and also speed up the process of approval and disbursal.