CIBIL Score for Personal Loan

Given the advancement in technology and the disruption of the digital lending space, getting a personal loan has become easier than ever. But there are certain criteria’s that you need to meet to successfully get a personal loan. Apart from being a resident of India, falling in the age and income bracket, there are other very important criteria that you need to fulfill. That is the CIBIL score. A good CIBIL score is mandatory to get a personal loan although the exact score required might be different for every bank.

 

Why is checking your CIBIL Score important?

 

Before applying for personal loans, checking your credit rating or CIBIL Score is very important. Because it is the first thing that your financial institution will check before approving your loan application. When you check your credit score yourself, it is known as a soft inquiry. This does not have any impact on your credit score. But if the bank runs a check on your credit report, it is known as a hard inquiry. This affects your credit score negatively. So, before you apply to any bank for personal loans, you should always-

 

• Check your eligibility criteria
• Check you're cibil score before applying
• Figure out whether you are eligible for the loan or not
• Apply only if you are eligible

 

Ways to improve personal loan CIBIL Score

 

Below given are the best ways to quickly boost your credit score to get personal loans

 

1. Check your credit reports frequently to rectify the errors-

 

You should always check your credit report and score regularly. Checking them is important because it will help you to spot the errors. So, you can take timely action and dispute those errors.

 

2. Make all your due payments on time-

 

You should always pay your outstanding credit card bills and loan EMIs on time. Even a single missed payment can have a huge impact on your credit rating which can affect your eligibility for credit products in the future.

 

 

3. Do not max out your credit card limit-

 

Try not to over-utilize your credit card limit. It is because overutilizing your credit card limit increases your credit utilization which, in turn, lowers your credit score. Ideally, you should keep your credit utilization ratio up to 30%.

 

4. Maintain your Debt to Income ratio-

 

Lenders consider many factors while checking your creditworthiness. Your debt to income ratio (DTI) ratio is one of those important things. You must maintain the amount of debt you have over your monthly income. This ratio should not exceed 40% at any time.

 

5. Use your credit card frequently-

 

If you own a credit card in your wallet, but you do not use it often. Try using it more often to get additional benefits. Use your card for making purchases online or paying your utility bills and earn cashback or rewards on it. This will also help you build a credit record. Please note that debit card transactions are not included in your credit score.

Personal loans are one of the best credit instruments to meet your instant financial needs. To improve your chances of getting a personal loan in the future and to secure a low rate of interest, you should have a good CIBIL score of 750 or above. You can try out the above-mentioned ways to boost your credit score before applying for personal loans.