Business Wire IndiaPersonal loans are becoming a popular avenue of financing as they don’t require any asset to be pledged as security and can be applied for easily online. As per a recently conducted survey, approximately one third of Indians would readily take a loan to buy a smart TV, smartphone or other consumer durables to upgrade their lifestyle and a significant share of them would opt for an unsecured personal loan to meet their goals. However, since a personal loan is a collateral-free offering, obtaining quick approval requires you to have a stellar credit score. Lenders often check CIBIL score of borrowers over other credit rating agencies as TransUnion CIBIL is the country’s premier rating agency. Hence, it’s important that you know about the required CIBIL score for personal loan applications before you approach a lender for financing. Here’s a rundown on what you need to know about the ideal CIBIL score for a personal loan. What is a CIBIL score? Your CIBIL score is a three-digit number calculated as per your previous credit behaviour, using details included in the ‘Accounts’ and ‘Enquiries’ section of your CIBIL report. These details include your loan and credit card activity, repayment status, due dates and outstanding loan amounts. CIBIL scores measure your creditworthiness and range between 300 and 900. The closer you are to 900, the better are your chances of getting loan approval. In fact, more than 75% of loans are approved for applicants with CIBIL scores exceeding 750. What is the minimum CIBIL score for personal loan? Generally, a CIBIL score of 750 is required for personal loan approval and anything less may either result in rejection or approval with higher interest rate. The closer your score is to 900, the better are your chances of enjoying instant approval. Moreover, an excellent CIBIL score gives you the power to negotiate for favourable personal loan interest rates. What are the factors that contribute to a CIBIL score?
- History with credit: About 30% of your CIBIL score evaluates your past performance with debt.
- Credit type and duration: About 25% of your score assesses the kinds of loans availed: secured/unsecured, short-term/long-term
- Credit exposure: About 25% of your score is dedicated towards the total amount of credit taken
- Other parameters: About 20% of your score evaluates your credit utilisation ratio and factors such as your recent behaviour with credit
How to check your CIBIL score? You can get your free CIBIL report online by accessing it through the official website of TransUnion CIBIL. Likewise, you can check your CIBIL score for free through Bajaj Finserv’s online provision. How to improve your CIBIL score? Since scores below 750 are less than ideal for personal loans, you may want to improve your credentials before you apply for funding. Here’s how you can do so.
- Ensure that you are never late on EMI payments
- Practice judicious use of your credit card, keeping your utilisation below 30%
- Apply for a mix of secured and unsecured loans
- Stay clear of excessive credit during a short timeframe
- Avoid making multiple loan applications at once
- Review your credit report often to rectify errors
Once you have an excellent CIBIL score, you can get access to offerings like the Bajaj Finserv Personal Loan. Here, you get collateral-free funding of up to Rs.25 lakh, repayable over a flexible tenor of up to 60 months. Additionally, with the Flexi loan facility, you can borrow from your sanction in parts, without having to submit multiple applications and pay interest only on the amount you withdraw. Further, with the simple eligibility criteria and minimal requirement for documentation, you can enjoy a hassle-free application process, with online approval in 5 minutes. Finally, you can check your pre-approved offer to make the most of your CIBIL score and avail instant financing through a customised deal.
Source: Businesswire