As we are all aware, a CIBIL credit score and Credit Information Report (CIR) is an essential requirement by any banking or institution where you intend to apply for an extended line of credit. This credit score of yours is contained in your credit report which is a comprehensive document comprising of information related to your current and past credit activity. The better your credit history, the higher your score will be. On an overall basis, CIBIL credit score and Credit Information Report reflect your credit rating in the potential eyes of any financial institution or bank.
To elaborate further, your CIBIL credit score and Credit Information Report (credit rating) gives banks and financial lenders a quick idea of how reliable you are in fulfilling your debt obligations. Based on your credit score, many financial institutions decide whether to approve your loan or credit card application.
Banks have a standard score requirement of 750 (this is also the minimum score requirement) when reviewing your application because it implies that you have been a low-risk customer who has demonstrated a good track record of repaying loans on time. You stand a good chance of being approved for a loan or credit card with a score of 750 or more.
On the contrary, if you have a low score, banks are reluctant to give you any credit and will most probably reject your application for a loan or credit card. Banks already have this information as they report every credit-related transaction to CIBIL on a monthly basis.
This information includes your previous payment history with regard to your loans and credit cards, total available credit balance, existing loan and credit cards which are active and additional financial information. All of this is taken into consideration when calculating your CIBIL credit score. The biggest factor that makes up your credit score is your repayment history. Even one or two missed or delayed payments can negatively impact your credit score.
As mentioned earlier, a CIBIL credit score check is undertaken by a bank before lending a loan to a potential customer, this is just a single step of the entire loan approval process. Know the complete process below.
First, you need to fill up a loan application form. This form is available online at the respective banks website or you can physically visit the nearest branch.
One you fill up your details, you need to submit the form to the loan department of the bank.
Now, the bank will contact CIBIL and check your previous financial records through your CIBIL credit score and Credit Information Report (credit rating).
A low credit score and poor financial history will immediately lead to rejection of the loan.
A high credit rating will make you eligible and your application will be put forward based on the documents that you’ve submitted.
Non-eligibility leads to rejection of the application.
Post eligibility being met, the bank will decide to disburse the loan on your name.
To begin with, a bank or financial institution will look through your CIBIL report in order to determine the following information:
A personal loan is a loan taken for the purpose of personal utility. It is an unsecured loan. A personal loan comes with a high rate of interest and can be used to finance personal interests such as a wedding, vacation or house renovation. Unlike other types of loans, you can completely utilise the money in every aspect. There are no restrictions on the consumption of a personal loan as it offers full flexibility.
Since it is an unsecured loan, there is no such collateral required to guarantee the risk with any assets. The bank or credit lender bears the entire risk in the case of a personal loan.
There is no fixed minimum score required to apply for a loan. The higher your score, the better your chances are of your loan application being approved, as the bank is lending you the amount purely on the basis of your high credit score. Typically, banks and credit institutions look for a score of 750 or above in order to further process your loan application. It is possible to get a loan with a score less than 750, but you might face harsher loan conditions such as a higher interest rate, smaller loan amount, shorter repayment period and more documentation.
If you apply with a poor score, there is a high chance that your application will be rejected. Always remember that if you have a lower credit score you will pay a higher interest rate and having a higher credit score will get you a lower interest rate and each rejection negatively impacts your credit score.
Interest rates for a personal loan depends upon the following factors:
Mandatory documents required for a personal loan approval:
An auto loan is a loan taken to finance the purchase of a vehicle namely a car or bike. You can take an auto loan to buy a vehicle for personal or business purposes. The repayment is based on your income and other requirements. Also, an advantage is that you get up to 90% of the invoice value of the vehicle as a loan. There is no minimum score requirement, but it is recommended that you have a score of 700 or more to avail an auto loan. Interest rates for an auto loan depends upon the following factors.
An education loan is a financial aid undertaken to finance the higher education expenses of the students. Students with excellent academic record are offered financial help to study in renowned institutes in India and abroad. Eligibility for an educational loan:
You can always apply for a loan to purchase your dream home. This is a home loan. You can also take a loan against your current property. Up to 80-85% of the cost of the property is given as a loan. The repayment tenure varies from 5 years to 30 years. The interest rates depend upon a lot of factors such as the city, location, existing property rates, etc. Mandatory documents required for a house loan:
A business loan is a loan taken to finance your business, it also applies to loans undertaken by corporates to meet their financial requirements. Just as there is a CIBIL credit score and Credit Information Report (CIR) for individuals, CIBIL produces the Company Credit Report (CCR). A company credit report is a record of a company's credit history. The interest rate depends upon a lot of parameters based upon the strength, size, existence and type of company etc. List of common documents required for a business loan:
What if I don’t have a credit history because I’ve never taken a loan or credit card?
In such a situation, the CIBIL report will contain a score that says NA (not applicable) or NH (no history) and lenders will not instantly provide you with a loan unless you’re either able to negotiate with them or are able to take a secured loan (or secured credit card) by leveraging a fixed deposit or property and start building your credit score.
Will my CIBIL report be affected if I’ve stood as guarantor on a defaulted loan?
A guarantor can be considered partly (if not financially) liable to the lender in case a default happens. If the same person was to stand as guarantor for another loan, the bank will deem him untrustworthy and won’t consider him as a guarantor.
What is credit repair?
Credit repair involves rebuilding your credit health to a level where you become eligible for loans. People typically need credit repair services to help them improve their credit score and undo the damage done to their credit health because of faulty financial behaviour in the past.
Is a credit score of 800 good?
Yes. In fact, a credit score of 800 is very good! Only a small percentage of people reach, and consistently maintain, such a high credit score.
What is the best credit score to have?
In India, the best credit score to have is one that is 750 or above. The three credit rating agencies that operate in India - CIBIL, Equifax, Experian and CRIF High Mark - issue a three digit credit score to individuals that is between 300 and 900. When you have a high score of 750 or above, banks are reassured that you have a good repayment history and are a low-risk customer.
