4 Important Things You Should Know About CIBIL Score to Avail Personal Loan

Personal Loans help many to get out of crunch financial situations. The best thing about them is that they are unsecured; therefore, the lender does not demand collateral. However, it means lenders will only offer unsecured loans to people with risk analysis. What if the borrower never returns the personal loan and the lender has no collateral to recover costs? To reduce credit risks on personal loans, lenders cross-check the credit score. Read more about the credit/CIBIL score before applying for personal loans. 

1. Credit score and its relation with creditworthiness 

As discussed above, quick personal loans are unsecured, lending institutions need something to determine the applicant’s creditworthiness. The CIBIL is the parameter, and it ranges between 300 and 900. Someone who has never taken a loan or applied for a credit line will score -1 or 0. Credit rating agencies are responsible for offering CIBIL scores to each individual. An individual’s credit history or repayment history determines it.

When someone pays all their credit card bills and loan EMIs timely, the CIBIL score rises. On the other hand, an individual’s credit score decreases after missing out on a loan EMI or credit card bill. Credit rating agencies update peoples’ credit scores according to their payments or defaults.

The lender will ask for personal details when you apply for a personal loan. With the help of customer details, a lender can easily access the CIBIL score. If the score is poor, it immediately considers the applicant unfit for the loan. A good score increases an individual’s credibility for payments. Thus, your CIBIL score can make or break your loan application. 

2. Understanding a good CIBIL score 

People often use an online personal loan EMI calculator to get an idea of monthly payments. However, they need to check whether they have the required CIBIL score for personal loans. A good CIBIL score is anything above 750. With Fullerton India, applicants will have a 100% guarantee for a personal loan with a CIBIL score of 750 or above. A good CIBIL score will allow individuals to get an affordable interest rate on loans. Also, people with better CIBIL scores might get larger personal loans at reasonable interest rates. 

In case the score is below 750, it leads to the rejection of the application. Even if the loan is approved, the individual might not get the desired interest rate. Also, the approved loan amount might be small due to a low CIBIL score. The minimum CIBIL score requirement might change for someone with a high monthly salary. 

3. Understanding a poor CIBIL score 

Under any circumstances, individuals should prevent their CIBIL score from going below 550. If the CIBIL score goes below 550, it is in a poor zone. A CIBIL score of 550 or below might give you no chance of getting a personal loan. Negotiations are open for individuals with CIBIL score up to 600. Below that leads to a complete denial. 

4. Improving the CIBIL score for higher loans 

If the CIBIL score is low, one might not get quick personal loans. However, it does not mean that the CIBIL score will never augment. Start by paying off pending bills and debts. After paying all the pending bills, the CIBIL score will start rising. Pre-paying EMIs might also help individuals to augment their CIBIL scores. Check your CIBIL score and apply for a personal loan with Fullerton now.

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