A credit score above 750 is considered excellent and may get approval for a personal loan at lower interest rates
Representative image. Reuters
A personal loan is one of the most common borrowing options for people who are looking for funds for a variety of personal reasons. In India, some of the best personal loans help borrowers access great value penalty online and in minutes.
Among the many factors, this ease of access is totally dependent on your eligibility, one of the main factors of which is the credit score. Usually, lenders in India will require borrower to have minimum CIBIL score of 750. The higher the CIBIL score, the easier the processing time of these loans will be.
What is the CIBIL score?
This is a three-digit credit rating assigned by TransUnion CIBIL Limited. The CIBIL score or credit score is a number that is on a scale of 300 to 900 points. With these points, based on your credit history, lenders are able to decide a person’s creditworthiness or ability to repay a loan. Then they decide on the eligibility of the loan and the applicable loan terms accordingly.
A credit score above 750 is considered excellent and can get approval for a personal loan at lower interest rates. However, if your CIBIL score is below 750, an individual can still apply for a personal loan, but the interest rate odds can be high.
The CIBIL score is calculated on 4 key factors, which are:
– Frequency of loan requests: People with multiple credit applications or previous loans can have a negative effect on the score, as it means that past loans may be equal to the current amount.
– Payment history: If an individual has a credit history that reflects late payments or defaults, it is likely that your credit score is going down.
– Use of credit: Borrowers who use a high percentage of their assigned credit limit indicate an increasing reliance on credit. It can also be another negative factor that can affect the credit score.
– Combination of credits: To have a positive impact on the credit score, a person must have a balance between secured and unsecured debt.
Steps to calculate the CIBIL score for free:
Step 1: Connect to the CIBIL website https://www.cibil.com/ and click on the ‘Get Your Free CIBIL Score & Report’ tab
2nd step: Create a Account by entering your personal information, such as your name, email address, proof of identity, PIN code and phone number
Step 3: After creating an account, click on the “Accept and continue” tab. You will receive an OTP on the registered mobile number
Step 4: Enter the OTP and complete the verification process (before that you will be taken to a new window, where it confirms your registration)
Step 5: Finally, click on the option “Go to the dashboard” to display your credit score.