A CIBIL score is an important factor that measures your creditworthiness. It is taken into consideration by lenders when you apply for any kind of credit product i.e. any loan or a credit card. It is done to check your credit health and make sure you can repay the borrowed sum on time. When it comes to taking personal loans, apart from the general eligibility criteria you will be required to fulfil, you will also need to have a good CIBIL score for a personal loan application to be approved.
How much CIBIL Score is required for a personal loan?
A CIBIL score ranges between 300 and 900. The minimum cibil score for the personal loan required is 750 and above. Such a credit score will help you to get better deals on loans and credit cards. Generally, a CIBIL score of 750 and above is considered as ideal by most lenders. If you have such a credit score, the chances of your loan rejection will be very less.
What to do if my credit score is bad or you do not have a CIBIL score?
A good CIBIL Score is not something you are born with. You need to build a good credit history to obtain a good credit score. If your credit score is bad or you are new to credit, you can do the following things i.e. get a credit card and pay your bills always on time or you can also apply for a small loan. If you will be diligent with your repayments, you will eventually have a good credit score to get an unsecured personal loan in the future.
Tips to improve CIBIL Score to get a Personal Loan
If you have a low CIBIL score, here are the steps you need to take to become eligible for a personal loan:
Keep your credit card utilization ratio as low as possible i.e. under 30%. Utilizing more credit than your defined credit limit makes you look credit hungry.
Pay your monthly dues on your credit card within the stipulated due date every month and keep away from paying just the minimum amount due. Carrying forward the remaining balance the next month will not only attract a heavy interest but it will also adversely affect your score.
If you feel you might miss out on the payment of dues inadvertently, opt for an auto-debit. This will give your lender the mandate to debit the monthly loan from your account on a fixed date every month.
If you have an on-going loan, pay the dues well within time every month to improve your score and set a good credit history for future lenders.
Keep checking your credit score and report frequently. It will help you to spot the errors and fix them as soon as possible. If you find inaccuracies or frauds in your report, get it rectified by raising a CIBIL online dispute form before applying for personal loans.