Minimum CIBIL Score for Personal Loan in India

Personal Loan with CIBIL Score Less Than 550

Most lenders will reject the personal loan application if your CIBIL score is less than 550. A low CIBIL score will indicate that you are not financially stable and will find it difficult to repay the loan. Few lenders do provide personal loans for a low credit score.

However, the interest rates will be high. It is important that you check the terms and conditions and compare the charges and interest rates before availing the loan.

Factors Affecting CIBIL Score or CIBIL Credit Scores

There are many factors that affect credit scores, either positively or negatively:

1. Missed Payments: Every time you miss a payment, it will negatively affect your credit score, and it will reflect on your credit report.

1. Credit Utilisation Ratio: Credit utilisation ratio is basically the percentage of credit you are using from your available credit. Using more than 30–40% of your total credit limit signals over-dependence on credit and can reduce your score.

1. Credit Mix: It is important to have a balanced mix of secured credit, like home loans, and unsecured loans, like personal loans, to improve credit health.

1. Number of Hard Inquiries: Frequent loan or credit card applications lead to multiple hard inquiries, which can negatively affect your score.

1. Length of Credit History: A longer and well-managed credit history reflects reliability and strengthens your CIBIL score. That is why it is advisable that you do not cancel or close your old credit card, especially if you have repaid your outstanding dues on time.

1. Outstanding Debts: A high amount of unpaid outstanding balance or multiple active loans indicates financial indiscipline and eventually lowers your credit score.

4 Surprising Ways Your Credit Score Impacts Your Loan

Your Credit Score plays a significant role to play in the approval of your loan application. Let's check your score for free in less than 3 minutes and understand its powers.

• Crucial Role: When applying for a loan, your Credit Score is as important as your employment history, salary, and other eligibility factors. Make sure your score is at least above 750. 800 is a great number!
• Past Matters: One of the parameters for a loan approval is the repayment history of the applicant. How do they find it? By checking your Credit Score. Good repayment history = good Credit Score.
• Loan With No or Low Credit Score: This may be possible but be prepared for a longer processing time as banks will put in some additional checks. Moreover, you might not always get the best deal.
• Error-Free Credit Report: Sometimes errors can make their way into a spotless credit report and mar your lovely Credit Score. Give your report a glance before submitting your loan application to rule this out. Avoid trouble, you must! So let's check your Experian Credit Score for FREE! You read that right. We don't charge a rupee. Just click the link below and get started!

3 Things You Should Do Before Applying for a Loan

1. Check your CIBIL score: It is important to learn about your credit health before applying for a personal loan. You should check CIBIL score as it will give you an idea of where you stand in terms of your credit history and repayment. If your CIBIL score is low, you can take time to work on it and gradually increase it by taking the right measures.
2. Get your CIBIL report for free: You can visit the official website of CIBIL and claim your free report if you haven't already this year. The Reserve Bank of India (RBI) made it mandatory for all the credit bureaus in the country to offer one credit report for free per calendar year. In addition, you can also buy your CIBIL report for a one month, six months, and one year.
3. Browse and shortlist lenders: Once you have decided to take a personal loan, you will need to look for lenders that are offering good deals on their loans. It is better to browse for deals and select one that is most favourable to you. As a result of high competition, many banks are offering competitive interest rates on personal loans. Look out for the best deal that will offer you maximum benefits in terms of interest rate and tenure and fringe benefits such as processing fee waiver.
4. Apply only with a few lenders: After shortlisting lenders that are offering the loan suitable to your needs, you should apply only with a few lenders. You should be careful and avoid making multiple applications at the same time as this will trigger multiple hard inquiries. Several hard inquiries will have a negative effect on your CIBIL score.

What if you don't have a CIBIL Score?

Your CIBIL score acts as a report card for your credit health. It is determined by factors such as your credit history, repayment behavior, and types of credit used. A longer credit history helps lenders assess your reliability more easily when approving loans. However, if you don’t yet have a CIBIL score, lenders may consider other aspects like your age, income, and job stability to evaluate your creditworthiness.

Having a CIBIL score makes it easier for you to get access to credit products. Here are a couple of ways in which you can start working on building a credit history:

1. You can apply for a secured credit card which is issued against a fixed deposit. You can use it just like a credit card and pay the bills on time to improve your CIBIL score.
2. Generally, companies have partnerships with banks for its employees. You are more likely to get approval on a credit card from a bank that has an existing relationship with the company you are working for. You can then use your credit card for a few months following which you will have a CIBIL score. Make sure you are paying the bills on time to get a good score.

While a good CIBIL score is important for a personal loan, lenders also consider other factors before approval. To maintain a healthy credit score, you should be responsible with your money and manage loans and credit cards.

5 Factors That Can Help Improve Your CIBIL Score for a Personal Loan

• Bank Balance: A good bank balance shows a person's capacity to repay a loan. This increases the chances of getting a loan approved.
• Good income source: A stable income shows that you are capable of repaying the loan. This has a positive impact when you apply for a loan even if you have a low CIBIL score.
• Guarantor: Having a guarantor with a good CIBIL score who will sign for you will increase your chances of getting a personal loan if you have a low CIBIL score.
• Reduce the quantum of loan: You may get a loan of a slightly lesser amount with maybe a higher rate of interest if you don't have a minimum CIBIL score for personal loan.
• Regular payments: Repaying outstanding dues, taxes and debts on time will help you build a better CIBIL score. This would take some time but would surely aid in getting a loan granted.

Know More about CIBIL

1. CIBIL score for Axis Bank Personal Loan: Member banks of credit information agency, CIBIL, stipulate credit scores as part of their loan eligibility criteria. A good credit rating gets you the best rates on unsecured loans. Do you know Credit Score for Axis Bank Personal Loan
2. CIBIL score for ICICI Bank Personal Loan: If you need funds quickly, ICICI Bank is the place to go. Hassle-free disbursal, attractive interest rates and flexible repayment options all form part of the bank's loan offerings. Do you have the right Credit Score for ICICI Bank Personal Loan
3. CIBIL score for HDFC Bank Personal Loan: HDFC Bank is the preferred banking partner of thousands of loan seekers all across the country. If you want to a part of its personal loan community, you will need to have the required Credit Score for HDFC Bank Personal Loan

A good credit score can help you secure lower interest rates on loans and credit cards.

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