What is 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:

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.

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.

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.

A good credit score can help you access loans quickly and at competitive rates. To make sure that your credit score stays health and appealing to lenders, ensure the following aspects: 

• Pay your bills on time: Timely payment of your bills, including credit card bills, loan installments, and utility bills, is crucial. Late payments can negatively impact your credit score. Finnable provides convenient online payment options and automatic payment services to help you stay on track with your loan repayment.
• Decrease your credit utilisation: Credit utilisation refers to the percentage of your available credit that you are currently using. Aim to keep your credit utilisation below 30% of your available credit limit.
• Maintain a healthy credit mix: Having a mix of different types of credit, such as credit cards, loans, and a mortgage, can positively impact your credit score. 
• Regularly review your credit report: You can obtain a free copy of your credit report from Finnable.  This report can guide you in keeping your credit score low and understanding the factors that affect it. 
• Avoid excessive credit applications: Submitting multiple credit applications within a short period can lower your credit score. Instead, consult with Finnable to determine the most suitable loan options based on your credit profile, reducing the need for multiple applications. 
• Lengthen your credit history: A longer credit history indicates stability and responsible credit management. Avoid closing old credit card accounts and consider keeping them active, even if you use them sparingly.

Fact 1- Credit scores reflect your creditworthiness 

Your credit score is a numerical representation of your creditworthiness. It's used by lenders to assess the risk of lending to you. A higher credit score generally indicates a lower credit risk, making you more likely to qualify for loans and receive favorable terms. 

Fact 2- Multiple credit scoring institutions exist 

There are several credit scoring agencies, apart from CIBIL, that provide individuals credit scores and reports. These include Equifax and Experia. Finnable considers industry-standard scores assigned by responsible agencies to evaluate personal loan applications. 

Fact 3- Credit Scores are not the end all, be all 

Lenders often consider many factors when evaluating a loan application. Apart from the credit score, they also assess your loan repayment history, your income and employment status, and the loan amount and tenure you are applying for. Therefore, even if you do not have a stellar credit score, you can still receive a personal loan of your choosing. 

Fact 4- Credit scores can change over time 

Your credit score is not fixed; it can fluctuate based on your financial behaviour. Responsible credit management, timely payments, and maintaining low credit utilization can lead to an increase in your credit score over time. 

Fact 5- Regular credit monitoring is crucial 

Monitoring your credit score regularly allows you to stay informed about any changes or potential issues. Many credit monitoring services are available nowadays, allowing you to track your credit score, receive alerts for significant changes, and access tools to help you improve your creditworthiness. 

Fact 6- Credit repair takes time and effort

If your credit score is less than ideal, improving it will require patience and effort. The credit repair process may require resources, personalized advice, and tailored loan options to help you rebuild your creditworthiness. So, reach out to a loan provider accordingly.

If you are consider paying off your previous loans, here are some key points to consider for ensuring a smooth repayment process:

• Create a repayment plan: Start by creating a comprehensive repayment plan that outlines the details of each loan you need to clear. Include the loan amount, interest rate, monthly payment, and the target date for full repayment. Use Finnable’s personal loam EMI calculator to know and determine in advance your loan terms, tenure, interest rates, and EMI amount. 
• Prioritise high-interest loans: If you have multiple loans, prioritise paying off the ones with the highest interest rates first. By doing so, you can reduce the overall interest you'll pay and potentially save money.  

• Make timely payments: Ensure that you make all loan payments on time because late or missed payments can negatively impact your credit score. Most lenders now provide convenient online payment options, reminders, and automatic payment services to help you stay on track with your loan repayments. 

• Consider debt consolidation: If you have multiple loans with different lenders, you may consider consolidating them into a single loan with Finable. Debt consolidation can simplify your repayment process, potentially lower your interest rate,