What is the Minimum Credit Score you Need to Avail a Loan

After weeks of house hunting, you finally find your dream home. Overwhelmed with excitement, you are eager to own it as soon as possible by taking a home loan. While you are checking the documents and eligibility to avail a loan, you come across a point that says that you should have a minimum CIBIL score required for home loan. Let’s look what is a CIBIL score, how CIBIL credit score range is decided and why it matters to have a good credit record to avail a loan? What is a CIBIL Score? Your credit score decides your creditworthiness- it is your financial benchmark through which lenders and banks determine if you are a reliable borrower. Whenever you apply for a loan or a credit card, your credit score is an important factor that affects your loan eligibility. The CIBIL score range by CIBIL ranges between 300 and 900. A score closer to 900 indicates you are creditworthy and less likely to default on credit repayments. On the other hand, a score lower or closer to 300 makes you a risky borrower. A lower credit score could lead to your loan application being rejected or could give you a lesser loan amount. There are various factors, which affect your credit score calculation. Any changes in them can increase or decrease your credit score. Your loan repayment turnout, credit card utilisation ratio, credit limit availed, unsecured credit, etc. are some factors affecting your credit score. What is a Minimum CIBIL Score Requirement? When you contact a lender to avail a loan, among other procedures to be followed they might inform you that you should have a minimum CIBIL score for loan. Before applying for a loan the thing surely strikes in one’s mind is: what is a good credit score? How can you gauge the minimum credit score for loan approval? The minimum CIBIL score required for personal loan or any loan is ideally above 750. If your rating is lower than 750, your application could get rejected. Even if it doesn’t, you may have to pay a higher interest rate. Before you apply for a loan, you may want to consider how can credit score determine your loan amount and your EMIs. Similarly, the CIBIL score required for credit card, falls under a range of 700-750. Lenders and banks usually accept a score, which is at least 700 and above, to issue you a credit card. Who Creates your Credit Score? The Credit Information Bureau (India) Limited or CIBIL is one of the four authorised credit bureaus in India. CIBIL is the authority, which keeps an eye on your financial transactions and creates your CIBIL score. It collects your information from banks and various lenders and analyses it. CIBIL decides your CIBIL credit score range based on your borrowing data and assigns you a credit score. How is your Credit Score Calculated? A calculated analysis of the following factors is used to create your credit score.

• -History of your credit repayment
• -The amount you owe to lenders
• -Number of years of servicing debt
• -Amount and number of loans you have taken or applied for
• -Your utilisation ratio, which is the credit limit you avail
• -Credit mix
• -Length of your credit account

How can you Improve Credit Score Maintaining a CIBIL score, more than the minimum CIBIL score required for personal loan, helps expedite your loan approval process and enables you to negotiate for a lower interest rate. Therefore, it is necessary to have a good credit score. Even if you do not have one, you can improve your credit score by attending to your credit practices. To know how to improve cibil score fast, let’s look into ways, which definitely works if followed in proper way:

• -Ensure that you pay all your bills on time. This includes your loan EMIs and your credit card bills. A delay in these can adversely affect your score.
• -Utilising the credit card balance under the advisable limit of 30% of the total available credit limit is an excellent method to keep your credit score under check.
• -Avoid applying for multiple loans. It may indicate you are credit hungry, reducing your score.
• -Avoid multiple credit cards.
• -Make your credit card payments more than once a month. Repayment of due payments helps increase credit score.
• -Pay off debt rather than moving it from one card to another.

In a Nutshell If you are unable to maintain a good CIBIL score range for home loan, it could derail your financial goals. Availing a loan to buy your dream home is easy when you maintain a good credit score. Bajaj Finserv brings you pre-approved offers for personal loans, home loans, and a host of other financial products that can help your credit score through timely repayment. Share your basic details and avail your loan through a simplified process.