Personal Loan is the risk to banks as they are unsecured loans. So, here Credit score is the primary requirement.
A credit score is the rating which is assigned by the financial institutions to the individuals to represent their creditworthiness. And this plays an important role in the approval of loans. Based on the CIBIL score lenders offer loan to the individuals.
Also read: “How to Increase Cibil Score with Personal Loan“
The company named TransUnion CIBIL Limited, takes the information from banks and other Lenders to check the financial behavior of the individuals and awards CIBIL which reflect the creditworthiness of the individual.
What CIBIL Score Is Necessary For a Personal Loan Approval?
According to the banks, 750 is the good CIBIL for a personal loan. Any score above 750 will list you as creditworthy and the Loan will be processed without any hassle.
Generally, Credit Score ranges from 300 to 900. 300 is the worst and 900 is best. In case of a personal loan, lenders expect credit worthiness and CIBIL score helps the lenders to know the creditworthiness. Good credit score make your creditworthiness and indicates you are being responsible at the time of repayment.
Credit score also impacts the Interest rates. If you hold a good CIBIL your loan will get instant approval on Personal Laon at lowest possible interest rates. Interest rates will be high for the people with low credit score when compared with the people holding good credit score.
Factors affecting your CIBIL score in positive manner :
- Being prompt in clearing your credit card bills
- Regular repayment of EMI’s on time
- Clearing you’re whole outstanding than paying minimum bills of credit cards
Factors affecting your CIBIL score in negatively:
- Late or non-payments of Credit card bills and Loan EMI’s if any.
- Draining your credit card limit of more than 75%.
- Playing the safe game by paying minimum due and keeping outstanding as it is will also affect your credit score
- Holding too many loans will also affect your credit score.