Borrowing or buying on credit is a financial burden for those affected, but people need to borrow, especially for large purchases of capital goods such as a house, car, or college. Hence, it is better to maintain a good credit rating so that a loan can be easily taken out at an attractive rate if necessary.

Credit Information Bureau (India) Limited (CIBIL) is the organization that maintains credit scores (CIBIL score) based on various criteria that affect creditworthiness.

What Is The Ideal CIBIL Score In India To Apply For A Personal Loan?

“The ideal CIBIL score would be over 550 to get good interest rates and to be able to borrow a larger amount of tickets,” says Raghuvir Gakhar, CEO, CashBean (PC Financial Services Pvt Ltd.).

How are CIBIL scores and loan approvals related?

“The CIBIL score is an important decision-making factor for the lender. The higher the score, the better your chances of getting a loan approved, ”says Zafar Imam, CEO of FinShell Pay.

“The CIBIL score is a summary of credit history derived from the details in the Accounts and Inquiries sections of the CIBIL report. The Cibil score can range from 300 to 900. The closer your score is to 900, the higher the chances that your loan application will be approved. It also reflects all DPD (payment due) or settlements, if these have taken place on one of the previous accounts. This report helps in assessing the financial nature of the customer, ”he continues.

When to Borrow and How Credit Score Helps You Get Borrowed

Can You Get a Personal Loan If You Have a Low CIBIL Score?

“When you have a bad Cibil score, getting a personal loan can be difficult, especially from the mainstream lenders. CIBIL is one of the best ways to assess a customer’s creditworthiness. Since PL is an unsecured loan, the CIBIL score becomes much more important to the lender, ”says Imam.

“However, there are many new age lenders who can offer a personal loan despite having a low CIBIL score. You can ask for a higher interest rate, offer the loan at a lower term and a lower loan amount. There are many fintechs that offer short term personal loans in the 10,000 to 50,000 range. You can therefore be somewhat more flexible with regard to the acceptance of the low CIBIL score. These fintech companies also use some alternative data, viz. Read your cell phone text message to assess your cash flow and credit history. Some fintech companies aim to offer personal loans to consumers with a low CIBIL score because they specialize in this segment and have a robust credit rating method for such customers, ”continues Imam.

Some Tips On Getting A Personal Loan For Low CIBIL Applicants?

“Digital lenders are the best option for low Cibil borrowers to not only get credit but also improve their Cibil score. Ordinarily, traditional banks wouldn’t look differently at people who are new to the credit market or who got bad scores due to a single incident, but digital lending allows one to step through the borrowing process and timely repayment can increase their score . At the same time, one should always try to do this by taking out small bogus loans rather than something that puts a lot of pressure on the individual, and this is especially true for digital lenders who tend to give unsecured cash advances but at higher interest rates than banks, ”says Gakhar.