Personal loans are a popular financial instrument due to the flexibility when it comes to their usage. Whether you opt for a loan from a bank or an NBFC, these loans can fulfill almost all your financial requirements.
Among other things like age, employment and documentation, your credit/CIBIL score plays a very important role in the acceptance/rejection of your personal loan application.
CIBIL Score & Its Importance:
The Credit Information Bureau (India) Limited (CIBIL) tracks all financial reports from banks/NBFCs and scores individuals on a scale of 300-900 on the basis of these reports. This score is used by lenders as a parameter for one’s creditworthiness and repayment capability. A good CIBIL score for Personal Loan of around 750 increases your eligibility for a personal loan.
Increasing Low Credit Scores
To improve a low CIBIL/credit score, many individuals take the help of consultants or apply for personal loans. The records of timely repayments on the personal loan are sent to CIBIL by the lender which increases your credit score.
It is crucial that you check your credit score before applying for a loan as rejection of loan applications lead to a drop in credit score. Additionally, you should also compare personal loan scheme from both banks and NBFCs to find the best scheme that suits your requirements.
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