The link between CIBIL Score and loan approval

Learn about how your credit score is key to your loan approval process and the crucial help Bajaj Finserv Credit Pass can provide.
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2 min read
20 July 2023

For anyone who is ever applied for a loan, be it a personal loan, home loan, or a credit card, you have probably heard the term "CIBIL Score" thrown around a lot. But what exactly is a CIBIL Score and how does it impact your loan approval chances? Let's dive into this critical financial metric and uncover how it affects your financial journey.

What is a CIBIL Score?

A CIBIL Score is a 3-digit numeric representation of your creditworthiness. In India, the Credit Information Bureau (India) Limited (CIBIL) collects and maintains credit information of individuals and businesses and it is one of the most prominent credit bureaus in India. The CIBIL Score typically ranges from 300 to 900, with a higher score of 750+ indicating a stronger credit profile.

Importance of a good CIBIL Score

Now, you might wonder, why is a good CIBIL Score so important? The answer lies in how financial institutions, such as banks and Non-Banking Financial Companies (NBFCs), use this score to assess your creditworthiness. When you apply for a loan, lenders use your CIBIL Score to determine the risk associated with lending money to you. A high CIBIL Score signals responsible credit behaviour and gives lenders the confidence that you are likely to repay the loan on time.

Key factors affecting your CIBIL Score

Understanding the factors that influence your CIBIL Score is vital to managing your credit profile effectively. The major contributors to your CIBIL Score are:

  • Payment history: Timely repayment of credit card bills and loan EMIs reflects positively on your creditworthiness.

  • Credit utilisation: Using a significant portion of your credit limit can negatively impact your score. Aim to keep your credit utilisation ratio below 30%.

  • Credit mix: Maintaining a healthy mix of secured and unsecured loans can improve your score.

  • Credit enquiries: Multiple credit enquiries within a short period can raise concerns about your credit behaviour.

  • Credit age: A longer credit history often translates to a higher credit score.

Benefits of Good CIBIL Score for loan approval

The CIBIL Score plays a crucial role in the loan approval process. When you apply for a loan, the lender assesses your CIBIL Score to gauge the likelihood of timely repayments. A high CIBIL Score not only improves your chances of loan approval but also gives you the leverage to negotiate better loan terms and interest rates. On the other hand, a low CIBIL Score might lead to loan rejection or approval with less favourable terms, as you could be seen as a riskier borrower.

Building a good CIBIL Score with Bajaj Finserv Credit Pass

Now that you're familiar with the factors influencing your CIBIL Score, let us explore how Bajaj Finserv Credit Pass can help you build and maintain a healthy credit profile. Bajaj Finserv Credit Pass offers a personalised dashboard that empowers you to enhance your CIBIL Score through easy tracking of your credit health factors and monthly credit score updates. By using the interactive tools provided by the Credit Pass, you can make informed decisions that streamline your application process and pave the way for seamless loan approvals and favourable terms.

So, why wait? Take control of your credit future with Bajaj Finserv Credit Pass and watch your CIBIL Score soar to new heights!

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Frequently asked questions

Can I apply for a personal loan without having a CIBIL Score?

You can apply for a personal loan even if you don't have a CIBIL Score. However, before approving your loan application, a lender may consider additional variables such as your income, employment history, and credit behaviour.

How long does it take for a personal loan to be approved?

The time it takes to approve a personal loan can vary depending on factors such as the lender's policies and the documents you give. The approval procedure can often take anything from a few hours to a few days.

How to get a personal loan with a low CIBIL Score?

Don’t worry if you have a poor CIBIL Score. Lenders may still examine your loan application based on other variables such as your income, work history, and payment history. If you have a bad credit score, you can also consider taking a loan against collateral such a gold loan or a loan against property.