Know How CIBIL Score Is Important for Personal Lending

If you are looking for a loan, you must also understand the importance of the CIBIL score. CIBIL also referred to as TransUnion CIBIL is one of the renowned credit bureaus in India. Along with CIBIL, there are three credit bureaus in India – Experian, Equifax, and CRIF Highmark. Before the loan approval, lenders including banks and Non-Banking Financial Companies (NBFCs) check the CIBIL score to ensure the creditworthiness of the borrower. A CIBIL score ranges between 300 and 900. As a borrower, you must ensure that you have a higher CIBIL score to get approval on your desired loan amount. On the other hand, if you have a poor credit score or CIBIL score, there are higher chances of loan rejection or getting a loan at a higher rate of interest.

Below are a few of the factors that will help you understand the importance of CIBIL score for personal lending:

Loan amount

The loan amount is the amount borrowed from the lender for a certain period loan amount is highly dependent on the credit score. A higher credit score ensures that a borrower can avail of a higher loan amount. Alongside this, the biggest advantage of having a higher credit score is a higher chance of loan approval.

Documentation process

While applying for a Personal Loan, you need to submit certain documents to complete the loan application. A borrower with a good credit score gets loan approval faster as compared to others. Also, the documentation required is minimized when you have good credit or CIBIL score. Following is the list of documents that you need to submit while applying for a Personal Loan: Current address proof (Passport/Utility bills/Rent Agreement), KYC (Know Your Customer) documents like an Aadhaar/PAN Card, Latest salary slips and salary credit bank statements from the last 3 months, and Proof of employment, such as official mail ID confirmation /Emp ID Card.

Desired Credit score

When you are applying for a Personal Loan, you must fulfil certain eligibility criteria to avail of a Personal Loan. These eligibility criteria might differ from lender to lender and credit score or CIBIL score is one of the major criteria. A credit score or CIBIL score is a three-digit number that is based on your credit history or CIBIL history.

 

Interest rate

Interest rate is an additional cost on the borrowed amount for the duration of the loan. You must pay the principal amount plus the interest charged on the borrowed amount. The interest rate varies from lender to lender and is a major differentiator. As there are various lenders present in the market, it is an advantage for a borrower to choose a lender with a lower interest rate, though that is not the only deciding factor. It is important from the borrower’s point of view to maintain a higher credit or CIBIL score to avail of a loan at a lower interest rate.

Check CIBIL Score Online

You can check your CIBIL score online by following the below-mentioned steps:

Step 1. Visit the official website of CIBIL.

Step 2. Enter all the required details such as Name, PAN (Permanent Account Number), address, phone number, etc.

Step 3. Check and confirm all the provided necessary details and information.

Step 4. After confirming your details, you will receive OTP (One Time Password) on your provided mobile number.

Step 5: Lastly, you can check your credit score by inserting the received OTP.

 

Conclusion

Along with a CIBIL score of 750, the following are a few of the eligibility criteria that you must fulfil to get desired loan amount with a lower interest rate – you must be between 24 and 58 years of age and should be in current employment for minimum 6 months and should have minimum 24 months of total work experience. Please note that the mentioned eligibility criteria might differ from lender to lender. It is a good habit to visit the lender’s official website and check the eligibility criteria. This will help you avoid any sort of delays while applying for a Personal Loan.