The CIBIL score is a measure of your creditworthiness. It ranges between 300 and 900. The chances of obtaining a loan rest on this number to a great extent. The top bank is able to offer unsecured loans based on your credit history. Otherwise, you might have to offer collaterals which involve high risks. An impressive score of 750 and above allows customers to enjoy a whole range of benefits for themselves:
- Fast processing of the application
- Quick and hassle-free loan disbursal
- Minimum documents and paperwork
- Favourable terms and conditions
- Lower interest rates than the prevailing ones
It is a 3-digit number that appears on the credit profile. It will keep changing according to your financial activities. Have a look at why is a key factor in personal loan approval.
The Importance of CIBIL Score
An impressive rating instils a sense of relief and confidence among lenders. This is because it is a mark of your ability to pay back the loan on time. The bank can prioritize the application and ensure fast disbursal with just a few clicks. A poor score, typically under 580, acts as a red flag. The bank will have limited faith due to unsatisfactory payment history.
Your chances of being a defaulter remain high. The applicant might be subjected to fewer loan options and higher interest rates. The loan request can be rejected altogether. You might also be deprived of a few financial services from the bank. Therefore, before you apply for personal loan, ensure that the score is at least 650 if not more.
The Role of CIBIL Score in Loan Application
Studies have found that 80% of applications get approved if the score is 750. Have a look at how this 3-digit number impacts the process of obtaining a loan.
Ø Better Interest Rates
Customers are in a position to negotiate the rates with a high score. You can lower the administrative fees and charges by a significant margin as well. This helps to acquire an overall affordable personal loan. The outstanding balance is subsequently lowered which maximizes purchase value. There is no need to break your monthly budget to clear EMIs.
Ø Loan Amount Estimate
The best bank offers a range of 20K to 40L. A high rating above 800 can help you get the desired loan amount. So, it is a good idea to improve the credit score in case you wish to apply for a personal loan for marriage, home renovation, or similar big projects. You no longer have to think of breaking your FD or savings fund.
How to Boost Credit Score?
Repairing credit profiles is no rocket science. It can be done within 3-6 months. Pay your bills on time, avoid overusing credit cards, and clear as many debts as possible. Keep checking and reviewing the report for inaccuracies from time to time.
While learning how to apply for a personal loan, do check your CIBIL score as well. Having sound knowledge helps you understand how to increase and maintain a good figure.
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