A Good CIBIL™ Score Is The Key To Get Quick Loan Approvals

Loans get a bad rep among borrowers. They believe the process is complicated, confusing and time-consuming. But, it needn’t always be so! Do you want to know the secret to getting your loan approved quickly? 

The answer lies in your CIBIL™ score. It’s the magical key that unlocks loan approvals and simplifies the entire process. Continue reading to find out what is the CIBIL™ score and how it matters in getting your loan approved quickly. 

What is a CIBIL™ score? 

Your CIBIL™ score plays a crucial role in your loan process. It’s the key factor that makes or breaks the lender’s trust on the borrower. TransUnion CIBIL™ is one of the authorised credit agencies in India that provides the credit scores of individuals and businesses. The CIBIL™ score is generated based on the financial data collected from banks, NBFCs and other lending institutions. 

The CIBIL™ score is a three-digit number assigned to individuals and businesses by TransUnion CIBIL™. The score is based on your credit history and is used by lenders to assess the creditworthiness of potential borrowers. 

The score gives an idea to lenders regarding the possibility of defaults and the risk factor in lending to a particular borrower. Lenders make various decisions based on the credit score like:

• Whether to sanction the loan or not
• The interest rate to offer the borrower
• Loan amount to sanction
• And other loan terms and conditions

What are the benefits of having a good CIBIL™ score for loans? 

A good CIBIL™ score offers various benefits like:

• Quick and fast loan approvals
• Easy access to loans, credit cards and other credit products
• Better loan terms
• More negotiating power
• Higher loan amounts
• Premium credit cards

On the other hand, a low CIBIL™ score makes it challenging to secure the right loans at times of need. For greater insight into CIBIL™ score and its role in loan approvals, continue reading. 

What is a good CIBIL™ score? 

A CIBIL™ score between 700 and 900 is considered good. In addition, a good CIBIL™ score offers various benefits to the borrower like:

• Quick loan approvals
• Low-interest rate
• Higher loan amounts
• Longer repayment tenure
• Multiple loan offers
• Better loan choices
• Better negotiating power

Why is a good CIBIL™ score necessary for loans? 

• Irrespective of the type of loan – personal loan, home loan, car loan, bike loan or any other loan – having a good CIBIL™ score (above 700) increases the chances of getting the loan approved.
• Additionally, having a high CIBIL™ score makes the loan process quicker, faster and easier.
• A good CIBIL™ score also fetches you high loan amounts.
  • In the case of home loans, borrowers can get up to 80% of the total cost of the property when they have a credit score ranging between 700 and 900.
  • Similarly, a good credit score can improve your personal loan approval and help you get a high loan amount.
  • While car loans can be secured even without a high credit score, having a high score helps you secure the best loan interest rates and speed up the loan approval process.

How can borrowers build a good CIBIL™ score? 

Here are a few easy tips to improve your credit score:

• Avoid delayed or missing credit payments – this includes loan EMIs, credit card bills, etc.
• Use credit in moderation – avoid maxing out on your credit card limit; stay within 10% to 30% of the available limit;
• Monitor and track your credit score and credit history, at least once every 3 to 6 months;
• Maintain a balanced credit mix – try to build a credit portfolio that is a balanced mix of both secured and unsecured credit;
• Give a gap of at least six months between each subsequent loan application;

How to check my CIBIL™ score? 

There are multiple ways to check your CIBIL™ score online. Let’s explore a few ways to get your CIBIL™ score. 

Method #1: Via the CIBIL™ website

1. Login to the CIBIL™ website.
2. Check for the tab/button, “Get your Free Credit Score & Report.”
3. To check your score, you have to create an account on the site.
4. Furnish key details like name, email ID, mobile number, PAN number, etc.
5. Complete the verification using the OTP received on your mobile/email.
6. Once you complete the verification process, you can check your latest CIBIL™ score.

*Note that CIBIL™ offers a free credit score check only once a year. Beyond that, you have to pay to get your score. 

Method #2: Using CreditMantri, India’s No.1 credit resolution services provider

You can also check your credit score for free by using other online portals like CreditMantri. Here are the steps to get your credit score. 

1. Visit the CreditMantri website.
2. Click on “Free Credit Score.” Provide a few key details like name, email id, mobile number and PAN.
3. Your latest credit score will be provided along with other essential details.

Factors Affecting Your CIBIL™ Score

Now that you know the importance of the CIBIL ™ score in determining the chances of loan approval, let’s examine the various factors that contribute to your score. 

1. Payment History – On-time credit card bill payments, loan EMIs, utility payments, etc. Help you maintain a good credit history and boost your credit score.
2. Credit Mix – Having a balance between secured and unsecured debts ensures a positive impact on your credit score.
3. Credit Utilisation – Maintaining a low credit utilisation ratio is an excellent way to boost and improve your score.
4. Frequency of loan enquiries – Multiple loan/credit card applications within a short span is a red flag for lenders and can damage your credit score.

Three Mistakes to Avoid Hurting your CIBIL™ Score 

#Avoid Late Payments 

Even a single credit card bill or loan EMI paid after the due date can hurt your credit score. Very often, we forget to make the payment on time or use the money for other expenses. We believe that by paying the late fee, we can get back on track. 

Unfortunately, missed credit payments leave a long-lasting impact on your credit score. Delayed payments are noted on your credit report and show lenders that you’re irresponsible in handling loan/credit card bill payments. This can impact future loan eligibilities and delay the loan process significantly. 

#Avoid High Credit Utilisation 

When you apply for a credit card, you are provided with a credit limit (the maximum amount you can use on the card) based on your income, existing debts and other factors. While you can spend up to 100% of the assigned credit limit, it’s highly recommended that you keep it low. 

To maintain a good credit score, try to stay within 10% to 30% of the assigned credit limit. This shows prospective lenders that you’re not overly reliant on credit and can manage your finances responsibly by staying within your means. 

#Avoid Multiple Loan/Credit Card Applications within a Short Span 

Frequent loan or credit card applications shows that you’re hungry for credit and causes lenders to classify you as a risky borrower. Each time you apply for a loan/credit card, it’s noted as a hard inquiry on your credit report. Multiple hard inquiries within a short span can cause your score to drop. 

Your CIBIL™ Score Matters a Lot in Speeding up Loan Approvals 

The CIBIL™ is one of the biggest factors that determine your loan outcome. Having a high CIBIL™ improves your chances of loan sanction, as lenders prefer creditworthy borrowers with good CIBIL™ scores and an excellent credit report. 

Depending on the loan type and lender, a score of 750+ gets you the best deals – speedy loan approvals, low-interest rates, higher loan amounts and a longer tenure. Anything lower than 700 is considered a poor score and may delay the loan approval or even cause your loan applications to be rejected. 90% of the loans approved are offered to borrowers with a CIBIL™ score of 750 or higher. 

So, it’s highly recommended that you maintain an excellent score to improve your loan approval chances and simplify the loan process. Start by checking your credit score for free and take suitable measures to improve it if needed.