Before sanctioning any loan application, a lender always check the applicant’s CIBIL score. It reflects the borrower's ability to manage finances more effectively. In short, it represents whether a borrower is eligible to get a loan sanctioned or not. The CIBIL score range usually stays between 300 to 900 points.
Different loans have different eligibility criteria when it comes to meeting the necessary CIBIL score. Whether it is a personal or home loan, lenders have set parameters of CIBIL score that borrowers must meet. Here are lists of loans for which borrowers need to meet the minimum CIBIL score.
CIBIL score required to get a business loan
In case of secured loans, CIBIL scores range between 600 to 700 is ideal. Lenders look into credit history and other necessary details such as payment history. Based on the type of business loan, credit score requirements tend to change minutely.
CIBIL score required to get a home loan
In case of purchasing a home loan with a credit score below 750 is possible. However, it is best to keep it above 750 to attract lower interest rates.
For this, they also look into other factors such as income stability and age of the borrower before sanctioning the loan. Moreover, if the online CIBIL score check reflects around 550 or more, they can still avail of a home loan.
CIBIL score required to get a loan against property
A borrower needs to look for a suitable CIBIL score range for getting a loan against property. Other than the credit history the lender will also check the credit diversification, credit exposure etc. Lenders will look into all these before approving the loan against property.
How to increase CIBIL score?
The urgency to repair CIBIL score arises especially when it falls into the trap of becoming low. There are various reasons for this to happen. Here is a list of the major factors that influence the borrower's credit scores enabling those to increase with time.
- Clearing off late payments
Making repayments on time is the crucial factor behind building a suitable credit score. Irregular or late payments are indicative of poor credit management. Maintaining regularity in clearing payments on time will enhance the credit history and a good credit score will ensure a flexible approval of a loan.
- Managing multiple accounts
If borrowers have taken more accounts than they could repay then they might get red-flagged by lenders. They will perceive this as borrowers’ mismanagement and their eagerness to gain more credit irrespective of knowing their limit.
Moreover, this also holds the possibility of landing the borrowers in a questionable place in terms of repaying the credit. Hence using a free CIBIL score check borrowers should remember to check their credit scores when opting for another credit account or loan.
- Avoiding high credit utilisation
If borrowers go beyond their spending limit, it will result in increasing their credit utilisation. Lenders will view this as poor and irresponsible behaviour of spending. On checking the required CIBIL score for a home loan, borrowers can easily get their loans sanctioned by lenders at lower interest rates.
Moreover, many financial institutions extend customised pre-approved offers to their borrowers to fasten up the process of loan sanctioning. It is available for different financial products, such as home loan, loan against property, etc. Borrowers can check their pre-approved offers by providing the necessary details.
These are the important aspects to remember while considering the credit score for a loan. It is advisable to always check the CIBIL score range before making this application. Apart from this, keeping the documents arranged and in place while going for loan application is also relevant.