CIBIL score is a three-digit number, between 300 and 900, which is assigned against your credit history. In simple terms, it tells the bank how responsible you have been as a loan borrower and credit card user. So, here the question comes to mind that what CIBIL score is satisfactory as per lenders.
Can you secure a personal loan with a low credit score? The answer is ‘yes’, but then there are certain other conditions that you need to meet before the lender sanctions credit. When you approach a lender for a personal loan, the first thing it does is credit record assessment. Once the lender is satisfied with your credit score, commonly referred to as the CIBIL score, it will assess various other factors to check your eligibility for a personal loan.
What is CIBIL?
The full form of CIBIL is Credit Information Bureau (India) Limited, India’s oldest credit bureau. In 2016, TransUnion acquired CIBIL to become TransUnion CIBIL, still popular as CIBIL. There are four credit information companies in India which are recognised by the Reserve Bank. These are TransUnion CIBIL, Experian, Equifax and CRIF High Mark.
What is a CIBIL score?
CIBIL score is a three-digit number, between 300 and 900, which is assigned against your credit history. In simple terms, it tells the bank how responsible you have been as a loan borrower and credit card user. So, here the question comes to mind that what CIBIL score is satisfactory as per lenders.
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Is CIBIL score less than 700 bad?
Which score is good, bad or satisfactory depends on a lender. If your CIBIL score is above 750, it will be considered ‘Very Good’ which results in “Extremely High” chances of loan approval. If your score is in the range of 700-749, it gets a “Good” tag with “High” chances of personal loan sanction. The 650-699 score range gets you the “Satisfactory” tag and there is a possibility that your loan application will go through. With a score in the range of 600-649, there is a “low” possibility of loan approval as this credit score is considered “Bad”. If the number goes further down and slips below 600, the chances of loan approval is “Extremely Low” as this score range is assigned a “Very bad” tag.
Table source: ICICI Bank
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Five best tips to get a personal loan with a low CIBIL score:
Apply for a personal loan with a co-applicant:
If you have doubt that the bank may reject your personal loan application on the ground of low credit score, add a co-applicant in the loan application, which will boost chances of credit approval. But remember that the co-applicant should be an earning member of the family.
Stable Job with Reputed Employer:
If you are employed with a reputed company or a public sector organization, the chances of loan approval increase and the lender might not make your CIBIL score a reason for rejecting your application. Banks and NBFCs feel that employment with big reputed companies and public sector enterprises have higher income certainty than others.
Low debt-to-income ratio:
While considering a personal loan application, most lenders look for a lower debt-to-income ratio, preferably less than 40% as it shows a balanced debt to income level of the loan applicant.
Additional documentation:
If your credit score is low and you go for a personal loan, the lender may ask you to furnish some extra documents for your loan approval. So, you need to be prepared with all the possible documents that the banker may ask you to furnish.
Opt for a loan from an NBFC or a Fintech app:
You have an option to approach a non-bank lender in case you find it difficult to secure a loan from banks. There are many non-banking finance companies and fintech players in the market and you might succeed in getting a loan from one such company even with a low credit score.
