What is a Good CIBIL score?
Secured or unsecured loans can be availed to purchase an asset like a home, a vehicle or to meet a short-term requirement in time of a financial crisis. However, most NBFCs tend to ask for a CIBIL score at the time of application for a personal loan. The question first-time applicants tend to have is what is a good CIBIL Score?
The CIBIL Score is one of the important factors considered when it comes to availing a loan. A CIBIL score is a 3 digit number that gives a consumer’s credit history a rating. It is also a reflection of the individual’s credit profile.
A good CIBIL score is based on the borrowing and repayment history of the individual. The credit history is shared by the banks and NBFCs with CIBIL or any other rating agency, who then generate the score after due diligence.
A CIBIL Score is a 3 digit number ranging from 300 to 900. To get a correct CIBIL score, you will need to calculate the factors mentioned above. However, a score of 700 and higher is considered to be a good CIBIL Score.
The table below lets you know what a good CIBIL Score range is:
Chances of Approval
Less than 600
While a CIBIL Score range between 750-900 is an excellent CIBIL score, anything below 600 could have a negative impact on your loan application. The possibility of availing a loan with a low CIBIL score is negligible.
The range of a good CIBIL score is between 750 to 900. However, the lowest score a borrower can have is 300. If your score is low, there are ways and means to improve your CIBIL Score.
How to check CIBIL score?
It is important to know your CIBIL Score before availing a secured or unsecured loan. Though Finnable does not ask borrowers for their CIBIL score, it helps in having one at the time of application. So how exactly do you check your CIBIL Score?
To know what your CIBIL Score range is, you need to know the following things:
- Repayment History: To start calculating your CIBIL Score range, you will need to know your repayment history. The repayment history is how successfully you have managed to repay your debt. It accounts for about 35% of the CIBIL score.
- Credit Balance and Credit Utilisation: There are two factors to consider here. One is knowing how much credit you have used. The second is the credit balance against your loan and credit card available. If you have utilised the maximum of your credit limit, the lender would be hesitant to offer you an instant loan. 30% of your CIBIL Score comprises these factors.
- Duration of Credit: The repayment tenure, as well as the time required to repay the credit, contributes to 15% of the CIBIL Score. If you have availed a loan over a long period and successfully repaid what you owed, it would positively impact your CIBIL Score.
- New Credit: For every inquiry about a credit card or an instant loan application that you make, your CIBIL Score gets affected. It also contributes to 15% of the CIBIL Score.
- Credit Mix: The last 10% is the confluence of various credit and loans that you have in your name. If your credit mix includes any personal loan, secured loans, credit card, you are considered to have a healthy credit mix.
Benefits of a good CIBIL score
Having a good CIBIL Score while availing a loan is important. There are various benefits of knowing your CIBIL score:
- Low-interest rate: High CIBIL score indicates that the borrower has repaid all loans on time and is trustworthy. This gives lenders confidence and prompts them to offer comparatively lower interest rates.
- Quick approval: The chances of getting a loan approved quickly are much higher with a good CIBIL Score as it is an indication that the borrower has a low default rate and a good repayment record.
- High loan amount: If the borrower has a high CIBIL Score, the probability of getting a loan with a higher amount is good.
- Longer repayment tenure: All loans have a repayment tenure as set by the bank or financial institutions. Though lenders know that there is some amount of risk involved when it comes to a long loan tenure, with a good CIBIL Score, the borrower can get a longer time to repay his loans.
If you are applying for a personal loan and do not have a good CIBIL Score range, there are ways on how to improve CIBIL score. You can start by paying your dues on time, utilising the credit available, and clearing off old debts before availing a new one.
At Finnable, we offer personal loans to borrowers without a CIBIL Score. They can avail a personal loan, a wedding loan, or a travel loan instantly. However, if the applicant has an excellent CIBIL Score, Finnable offers personal loan with comparatively better interest rates and with loan tenures that would best suit the applicant.
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