Gone are the days when borrowing a loan used to be an activity between a money lender and the borrower. Most of us still think of the scenario of a very high and constantly increasing interest rate, collateral, and a very large number of documents being involved, when thinking of borrowing a loan. The reality, although, is far from this. Loan borrowing these days is a hassle-free task and you can even do so online from the comfort of your home without having to queue up outside banks. This makes borrowing a loan a very popular option among many people. Over time, there has also been an increase in options and you can easily choose a lender and type of loan as per your requirement and ability to repay the same based on a good cibil score and bad cibil score.
The eligibility criteria for borrowing a loan are not very difficult to meet. Most people stumble on the criterion of the CIBIL score. Being new to the concept of borrowing from a formal institution, it can be difficult to understand what the credit report is or what the CIBIL score is. The people who are familiar with money borrowing also often get stuck at this one. The CIBIL score is not very tricky to understand and a good CIBIL score can easily be built and maintained by following some steps. If you are looking for what is a good CIBIL score, the CIBIL score range, and how to improve CIBIL score, this article is the right place for you. In this article about what is a good CIBIL score in India, we will be discussing the range of CIBIL scores, an ideal credit score for different types of loans, the benefits of maintaining a good CIBIL score, and a few tips on how to increase your CIBIL score and improve your credit report.
Table Of Contents
In the upcoming sections of this article, you can find detailed information about the following topics:
- What is Loaney?
- What is a good CIBIL score to get a loan?
- CIBIL score ranges
- Things that are important to maintaining a good CIBIL score
- Benefits of a good CIBIL score
For your convenience, we have also added a section of frequently asked questions. This section will have commonly asked questions that might have crossed your mind and will help you get a better perspective on what is a good CIBIL score.
What Is Loaney?
If the task of applying for a loan, submitting your documents, submitting your CIBIL score, ensuring that you qualify for a loan, finding the right collateral and guarantor, and then getting the application approved for your loan overwhelms you then you are not alone. The fast-paced tech-savvy youth is all about getting work done online and not having to spend much time on one activity or follow up on the same over and over again. If you too feel the pressure whenever you are supposed to be dealing with financial issues and are skeptical about loan borrowing due to a long procedure and waiting time then Loaney is there for your rescue.
Loaney is an online portal for today’s generation offering instant personal loans. How is borrowing a loan from Loaney different from borrowing a loan elsewhere and what makes it youth-friendly? Loaney being an online platform allows the client to apply for and get a loan approved completely online following a seamless procedure. The client does not need a large number of documents and by only using your PAN card, Aadhar card linked with your mobile number, a bank account with a net banking facility, and a picture of yourself, you can easily get your loan approved. The platform reviews and verifies your application within a few minutes and approves of it, post which the amount is transferred to your registered bank account. You can then withdraw this amount as cash or use the funds as per your needs. The procedure is faster and there is no need for submitting collateral or presenting a guarantor. The platform also ensures client data confidentiality. You can easily borrow a loan of a small amount up to Rs. 15,000 on Loaney at a low interest rate and for a repayment tenure of about 2 months.
What Is A Good CIBIL Score To Get A Loan?
Before taking a look at what is a good CIBIL score in India, let us briefly understand what the CIBIL score is. This will help us understand a good score better.
The CIBIL score is a score assigned to individuals and companies based on their credit-related activities and loans borrowed in the past. This score is assigned by TransUnion CIBIL Limited which is a credit rating agency in India. The TransUnion CIBIL Limited maintains a record of a person’s or an organization’s credit-related activity. This record includes information on loans borrowed, repayments of debt in time, bill payments, and credits used by the concerned individual or organization.
The CIBIL score is a reflection of your credit report and is represented by a 3 digit number. This three-digit CIBIL score is a summary of the past credit activities of the person or company.
Talking about the CIBIL score range, this number is assigned on a scale of 300 to 900 where 900 is the best CIBIL score and 300 is the poorest. A CIBIL score which can be considered a good CIBIL score is 750 and above, score below 750 are considered a bad CIBIL score.
An ideal CIBIL score for different types of loans varies from one type to another. It can also depend on the guidelines and policies of the moneylender. The required CIBIL score for some common types of loan is as follows:
- Home Loan: a score of 650 and above
- Car Loan: 700 and above CIBIL score
- Business Loan: 700 and above credit score
- Loan against Property: credit score of 650 and above
- Gold Loan: CIBIL score is not required
- Personal Loan: CIBIL score of 700 and above
CIBIL Score Ranges
As mentioned in the previous section, the CIBIL score range varies from 300 to 900 and a credit score of 750 is considered a good CIBIL score.
The following are the CIBIL score ranges and what the scores in each range indicate:
- 300-550: This is the lowest among the CIBIL score ranges and implies that you have been a defaulter many times in the past. It indicates activities like delayed payments, missed deadlines, high credit utilization, and more in the past. This score makes it difficult for the borrower to qualify for a loan in India.
- 550-700: this range cannot exactly be termed as a good CIBIL score range or a bad CIBIL score range. If you have a CIBIL score that lies in this range then you are likely to have a few records of irregular payments and missed deadlines. Lending money to a person with a CIBIL score in this range might be risky for the bank. Some banks however might approve of your loan application and lend you the money but the loan will be offered at higher rates of interest and higher collateral.
- 700-750: having a score in this range means that your CIBIL scores are on the higher side of the CIBIL score ranges. This score is an indication of your good payment history and great track record. You can avail of most types of loans by having a credit score within this range. The banks and moneylenders will be willing to approve your loan but after conducting a little more credit research based on their policies and guidelines.
- 750-900: This is the highest of the CIBIL score ranges and implies that you have an excellent repayment record and all your payments have been made timely, you have not crossed the credit limit, and have a good balance between the types of loans borrowed. This score indicates your consistency and makes you eligible for borrowing any type of loan without paying a higher interest rate and without much hassle.
Now that we have understood the CIBIL score ranges, let us go ahead and figure out the factors that must be considered to maintain a good CIBIL score, how to improve CIBIL score, and the benefits of having a good CIBIL score.
Things To Consider While Maintaining A Good CIBIL Score
There are few practices of keeping a high CIBIL score to qualify for applying for a loan in India. In this section let us take a look at a few of them and understand how to improve the CIBIL score. The following things must be considered to maintain a good CIBIL score:
- Timely repayments of debts and clearing all credit balances within the stipulated time frame
- Paying bills on time and completing all pending payments
- Not closing old credit accounts to maintain a credit history
- Immediately clearing all the negative credit accounts.
- Not borrowing too much credit at the same time
- Repaying debts and not transferring them
- Closing all the negative accounts at the earliest.
Following the 7 tips offered above, you can easily maintain a high CIBIL credit score and meet the eligibility criteria for borrowing a loan in India.
The Benefits Of A Good CIBIL Score
Before we reach the section on the common questions regarding a good CIBIL score let us take a look at the benefits of a good CIBIL score. According to the eligibility criteria mentioned for qualifying for a loan, you must have a CIBIL score of at least 750 to apply for a loan. But having a score below 750 does not necessarily mean that you will not be able to apply for a loan. A good CIBIL score ensures that you can easily get your loan application approved without much difficulty and the banks will be willing to offer you a loan without much inquiry and analysis. You will not have to pay a higher rate of interest and will have an upper hand and can also negotiate over the interest rates. You can easily avail of unsecured debts or collateral-free loans by maintaining a high CIBIL score.
1. What is a good CIBIL score in India?
A CIBIL score of 750 and above is considered a good CBIL score in India.
2. How can I get a score of more than 700?
You can get a CIBIL score of 700 by making timely payments of bills, debts, and credits, closing negative accounts, maintaining a credit history, and not utilizing more than 30% of your credit limit.
3. Can I get a loan if my credit score is 500?
A credit score of 500 lies in the range of 300-550 which might make it difficult for you to get a loan. Some banks might approve of your loan application but for a higher interest rate.
4. How long will it take to improve my credit score?
This time duration will depend on how low the current score is and by how much you wish to increase the credit score.