A personal loan is one of the most popular financing options available today that gives you access to quick funds for a variety of uses. The unsecured nature of this loan makes it vitally important for lenders to ensure the creditworthiness of the applicant. In this regard, one of the first things that prospective lenders look at is the credit score or the Cibil Score of the applicant. Remember the higher your credit score, the better will be your loan approval chances.

How a good CIBIL Score benefits you?

A good CIBIL Score increases your chances of being approved for a personal loan. Not only this, but you will also be eligible for additional benefits which are mentioned below-

  • Lower interest rate
  • Higher loan amount
  • Shorter loan application processing times/quicker approval
  • Longer tenure

Do’s & Don’ts to maintain good CIBIL score

What to do?

Here is how you can achieve your best credit score:

  • Pay all your loan EMIs and credit card bills on time and in full.
  • Borrow only what you need.
  • Maintain a low credit utilization ratio i.e. below 30%.
  • Keep a balance between secured and unsecured debts

What not to do?

  • Never default on/settle your credit card debt or loan
  • Do not make very frequent credit applications as it shows your credit hungry behavior to the lenders.
  • Check your credit report at regular intervals and get errors (if any) corrected immediately.
  • Do not close your accounts which have a long credit history.

How does the Cibil Score rating impact your loan eligibility?

The Cibil score rating ranges from 300 to 900. The higher your Cibil Score is, the better are your loan approval chances. To get approved for loans easily, one needs to have a credit score greater than 750. Any score above 750 means that you have an excellent score which creates a good impression in the eyes of the lender and thus accelerates your loan eligibility. So, if you are looking to get a personal loan and do not have an optimum credit score as of now. You can follow the above-mentioned tips to achieve a good credit score in no time.

Conclusion

Here in the above sections, we have discussed in detail the importance of a good cibil score while applying for personal loans. However, you should always remember that it is not the only consideration that impacts your eligibility for personal loans. Lenders also place significant importance on your income, age, employment history, number of dependents, etc. as well. So, do ensure that you meet all the eligibility criteria set by your prospective lender before considering personal loans to meet your immediate financial needs.

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