CIBIL score is a three-digit number that reflects your creditworthiness. It plays a vital role in securing favourable terms and interest rates on a Personal Loan. In this blog, we'll explore how leveraging your CIBIL score
opens doors to better Personal Loan options, turning your dreams into a reality.
What is a CIBIL Score?
CIBIL score, is a three-digit numeric representation that assesses an individual's creditworthiness. The score typically ranges between 300 and 900, with a higher score indicating better credit health. It's calculated based on various factors such as payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries. A high credit score reflects responsible credit behaviour and increases the likelihood of loan approval at favourable terms, including lower interest rates and higher borrowing limits.
What are the Impacts of CIBIL Score on Leveraging Personal Loans?
The CIBIL score plays a significant role in leveraging a Personal Loan in several ways:
1. Loan Approval:
A high CIBIL score substantially increases the chances of a Personal Loan
being approved. Lenders perceive individuals with higher scores as less risky borrowers, making them more likely to qualify for a loan.
2. Interest Rates: A good CIBIL score allows borrowers to negotiate for lower interest rates on their loans. Lenders often offer more favourable terms, including reduced interest rates, to borrowers with high credit scores. This may result in significant savings over the loan tenure.
3. Loan Amount: A high CIBIL score can also influence the loan amount sanctioned by lenders. Individuals with good credit scores may be eligible for larger loan amounts as lenders perceive them as less risky borrowers who are more likely to repay the loan.
4. Loan Tenure: Borrowers with higher credit scores might have the flexibility to negotiate for longer loan tenures. This allows for smaller monthly payments and more manageable repayment schedules, providing financial ease and flexibility.
5. Quick Approval Process: A good CIBIL score streamlines the approval process. Lenders are more inclined to expedite the approval process for borrowers with good credit scores.
Here are some basic eligibility criteria for a Personal Loan:
Note: The above-mentioned eligibility criteria are the basic requirements. It can vary from lender to lender.
When applying for a Personal Loan, you will need to submit the following list of documents:
1. KYC Documents: Aadhaar Card and PAN Card
2. Current Address Proof: Passport /Utility bills/ Rental agreement
3. Income Documents: Latest salary slips
4. Financial Documents: Salary Credit Bank Statement for the last 3 months
5. Employment Proof: Official mail ID confirmation /Emp ID Card (in case official mail ID confirmation is not possible)
Note: The above-mentioned documents are the basic requirements and can vary from lender to lender.
A good CIBIL score significantly impacts the terms and conditions offered by lenders for a Personal Loan. It not only increases the likelihood of loan approval but also allows borrowers to negotiate better interest rates, higher loan amounts, and more flexible repayment options, ultimately making the process more affordable and accessible.