CIBIL Score For Personal Loan

Loans in India, such as personal loans, business loans, etc., require the borrower to present their creditworthiness before the lender approves the loan. The CIBIL score forms a vital part of the loan approval process to review an individual’s loan repayment capability.

But what is a CIBIL score, and what is the minimum CIBIL score for personal loans?

What Is A CIBIL Score?

When lenders such as banks and NBFCs offer the loan amount to any borrower, they take on a high risk if the borrower defaults on the repayment of the loan. Borrowers are legally liable to repay the principal amount with interest to the lender within the loan tenure. However, sometimes borrowers default on the EMI repayment, forcing the lenders to incur losses.

Lenders mitigate such losses by ensuring that the borrower is financially capable of repaying the loan even before offering the loan amount. Termed creditworthiness, lenders include this factor as a part of their eligibility criteria.

The CIBIL score is a three-digit score out of 900 that helps the lender check the borrower's creditworthiness before offering the loan amount. An individual with a score closer to 900 is deemed more capable of repaying a loan than those with a lower credit score in India. Since personal loans are unsecured and do not require the pledging of any asset, lenders prefer to approve the personal loan amount for borrowers with a high CIBIL score.

What Is The Minimum Cibil Score For A Personal Loan?

In most loan products, lenders require the borrower to pledge an asset as collateral which the lenders are legally liable to sell if the borrower defaults on repaying the loan. The collateral ensures that the lender can absorb the incurred losses by seizing and selling the asset. However, since personal loans are unsecured and do not require any collateral, the lenders demand that the borrower have a minimum CIBIL score to be eligible for a personal loan.

In India, most lenders set a CIBIL score above 750 out of 900 as the minimum requirement for a personal loan. Hence, you must have a CIBIL score above 750 before applying for a business loan with a lender, thereby increasing the chances of getting a quick approval and disbursal for a personal loan.

Conclusion:

Once you know you fulfill the CIBIL score requirements, you can apply for a personal loan with a reputable lender. However, it is wise to comprehensively analyze various loan products offered by lenders before you choose an ideal lender and loan.

FAQs:

Q.1: What is the perfect CIBIL score to get a personal loan?
Ans: A CIBIL score above 750 out of 900 is ideal for getting a personal loan in India.

Q.2: How to get a business loan with an average CIBIL score?
Ans: The first step you can take is to start improving your CIBIL score. However, if you need immediate capital, you can find a guarantor or provide collateral to the lenders.