Your CIBIL score matters a lot while applying for a Personal Loan. It reflects your creditworthiness in a simple manner.
It can be in the range of 300 to 900. A higher score means a better chance of securing a Personal Loan. It also gives you the advantage of securing a lower interest rate from banks and financial institutes.
A bad credit score implies that you didn’t pay your credits on time, or maybe, even, defaulted against a loan. You could also have been rejected again and again to get your loan application approved. The score will decrease when you do these things a number of times.
How Much CIBIL Score is Required?
The minimum CIBIL score you need to have to secure a Personal Loan easily is 750. If you have a higher score than that, you must be really good at paying back! Just keep up this habit.
Since Personal Loans don’t require any collateral, the lenders are at more risk of getting defaulted. As a security precaution, the interest rates charged are higher than usual. Having a good CIBIL score is, thus, crucial in securing a Personal Loan.
However, there’s still some hope left if you are a bad credit scorer. Some banks do provide Personal Loan for bad credit. You might have to agree to pay a higher interest rate, though.
As an alternative, you can switch to peer-to-peer lending. Here, the lending companies look at other important factors like your salary, tax payment history, etc. Another thing you can try is by co-signing a loan with someone who has a good credit score. Of course, you have to know this person well for them to agree to share the loan with you.
Increase Your CIBIL Score
If you have a low credit score, you can always increase it. There are a number of ways to do so.
- Pay your credit dues in time. Unpaid credit dues can be a disaster for your CIBIL score. So, keep checking your due reports, in case you forget to pay.
- Pay your EMI on time. Do not default a loan, whether it’s a personal loan or a car loan unless you want bad credit to your name. You can improve your credit score by paying on time.
- Limit your shopping sessions. Even if you are purchasing a product, use cash instead of a credit card. Spending recklessly can affect your CIBIL score adversely.
- Keep checking your CIBIL report on a periodic interval. Sometimes, discrepancies might be displayed in the report. In this case, you should inform the bank or financial institute immediately to get it rectified.
What to Do When You Don’t Have a CIBIL Score
You might be someone who has never availed a loan or credit in any form. We completely understand your situation. Without any credit history to rely upon, it’s a difficult feat getting a loan for the first time.
However, there are some ways in which you can build your credit history. You can avail a secured loan for an important asset like a car or a home. Another alternative is to apply for a credit card. It’s an easy way to build your CIBIL score.
You can say that having a good CIBIL score is really important for availing a Personal Loan, especially at a lower interest rate.
Securing a Personal Loan is an easy process after that. Check Personal Loan eligibility and document required for Personal Loan, and apply online.