If you are asking for personal loan, it means you are desperate to make certain things happen. It can be for a home renovation, for taking care of medical expenses or for marriage. Personal loan is approved very quickly and thus is the best thing you can have at the time of emergency. However, there are certain criteria for the bank to approve the personal loan. One of them is the CIBIL score which is very important for a bank to process the loan. Before you know how it affects the loan it is important to know what CIBIL score is.
✔ You can check your Credit Score FREE of cost at Paisabazaar
✔ You can check your Credit Score FREE of cost at Paisabazaar
What is a CIBIL score?
The credit information of every individual is stored with Credit Information Bureau (India) Limited which provide a score. This score is dependent on the previous loans that you have taken and all your records in the past. This credit information bureau is licensed by RBI and they operate not only for individual for companies too. They keep all sorts of credit records and the amount of credit you have taken.
The company was founded in 2000 and since then it has been helping people with loan processing. The payment of credit card and other loans, such as personal loan and home loan is kept into account. If you miss a loan payment, your CIBIL score will go down and it will be difficult for you to get a loan. The CIBIL score is generally between 300 and 900 and a good CIBIL score is 750 or above. However, it is possible to get a loan when your CIBIL score is 700 but that is also on the discretion of the bank. A bad score means you have failed in making the payments on time and the bank does not consider you to be a trusted for any loan in the future. If you keep on making the payment, your CIBIL score will keep on increasing and after certain point of time, you may again become eligible for the loan.
How personal loan is dependent on the CIBIL score?
CIBIL score is the first impression that the bank gets about the customer. The bank will first check the score and then offer you loan. The CIBIL score does not only depend on the payment history but it also depends on the amount of credit you have used. If you have used up all your credit limit, it means your burden is quite high and the possibility of your score going down is more. While approving the personal loan, the bank will check it for sure.
The CIBIL score will be high if you mix secured and unsecured loans compared to only unsecured loans which will imply that your burden is high and you don’t have a definite time to pay the loan. If you have recently opened a number of loan accounts and have taken many loans, the bank will be more cautious before approving your loan. This is quite definite as the bank would not want to be trapped.
CIBIL score is something that cannot be deleted but can be changed. If you don’t have any credit record in the past then you don’t have any credit score what so ever. You can change the score with your payment activities for a few months. So, if you are thinking of taking personal loan in future you shall be ready for the same. As personal loans are not always planned it is always better to keep your score higher by paying regular dues. It does not harm to pay dues regularly as that keeps your burden low. At the same time, you are already ready for a new loan.