Best CIBIL Score to Apply Your Loan in 2020

What is Good CIBIL Score and how To Maintain it.

A person's CIBIL score plays an important role in determining their creditworthiness and loan eligibility. A lender, such as a bank or a non-bank finance company will assess a potential borrower's CIBIL score to determine the loan eligibility and deciding whether or not to approve loan to a person.

The credit score also affects the amount of the sanctioned loan and the interest rate payable by the borrower. What's more, if the borrower has a low credit score, the lender can reject the loan application.

What is a CIBIL score ?

A CIBIL score is a three-digit number that indicates a person's credit score. This number ranges from 300 to 900. Banks and many other financing institutions check your credit score when you apply for a loan in order to check your loan eligibility. The score is calculated and compiled by Transunion CIBIL, one of the four credit agencies operating in India (other agencies include Experian, CRIF High Mark and Equifax).

What is a good CIBIL score ?

According to the credit information company, the website of TrasUnion CIBIL, the chances of your loan application being approved is as high as your CIBIL score is closer to 900. Generally, a score of 750 and above is considered a good score by the banks and non-banking finance companies while they check the creditworthiness and loan eligibility of a loan applicant.

The important thing to keep in mind is what effects the credit score. Such as equal monthly installments (EMIs) and full payment of credit card dues. If you have a weak credit score, it may be largely due to delayed or missed payments of loan EMIs or credit card bill or higher credit usage. (Credit usage ratio refers to the ratio of the total credit card limit used by the credit card holder.)

Different lenders use their own grading standards and levels to assess the loan eligibility and creditworthiness for accepting or rejecting the loan applications. Such as most of the government banks offer their loan products & categories majorly on the basis of two grades i.e. score above 700 and score below 700, whereas some banks even offer a lower rate of interest and other benefits to the borrowers carrying a credit score above 750.

Thus the higher credit score not only improves your loan eligibility with higher chances to get your loan approved but it also enables you to get more and more attractive offers and lower rate of interest on your loan.

What if your CIBIL score is low ?

Though the 700 and above CIBIL score is considered good for your loan eligibility to apply your loan and get it approved from most of the banks and non-banking finance companies, yet a loan seeker having a lower CIBIL score or credit score may also get the loan from some other banks or financing agencies which also consider the lower CIBIL score as well for assessing the loan eligibility, but with the security/mortgage against the loan, strict formalities and with the higher rate of interest. Many times some banks or non-banking finance companies also offer to conditionally approve the loan if the applicant clears his/her dues effecting their CIBIL score.
If you have a lower CIBIL score which restricts your loan eligibility, you should try to payback your dues and to take NOC from all your previous lenders. Also you should try to get a credit card and start paying it's bill regularly and timely which will gradually increase your good credit history and thus will improve your CIBIL score. One mistake that many people do when they try to clear their dues is that they try to negotiate and settle their dues for a lower amount should avoid that.