CIBIL Score is Requirement to Get Personal Loan

Snneha Lukka october 10, 2019

Whenever you apply for a personal loan, lenders will check your credit score to assess your creditworthiness. Just like academic marks, credit scores are a summary of your credit history; and the higher the score, the better. In India, CIBIL score is the most common credit score used to summarize a borrower’s credit history. In order to be eligible for a personal loan, lenders will have a minimum CIBIL score requirement. In this article, we’ll explain the importance of CIBIL scores as they relate to personal loans.

How is CIBIL score measured?

CIBIL score is measured on a scale of 0-900. A score of 750 and above is considered excellent, while scores between 600-750 are fair. Anything less than 600 is considered to be a bad CIBIL score. There are a variety of different factors which determine how CIBIL score is measured. Some of these parameters include the credit card and loan applications made by a borrower within a given month, the amount borrowed or spent on the card, as well as the borrower’s repayment habits.

For example, if you take a loan of Rs. 20,000 from a lender and make late payments or don’t repay it back at all, this will negatively impact your CIBIL score which becomes lower. On the other hand, if you consistently make your EMI payments on time, this becomes recorded in your credit history and increases your credit score. Since credit or CIBIL scores are indicative to a lender about an individual’s financial habits and creditworthiness, therefore, your access to formal credit (especially when it comes to home loans and vehicle loans) is highly dependant on your CIBIL score. A higher credit score makes you eligible for larger loan amounts, as well as attractive interest rates and repayment tenures.

One of the reasons why some people end up with low CIBIL scores is because they struggle to repay the loan due to poor financial management. Some individuals who earn a high salary, in spite of borrowing an affordable loan amount may not pay their EMIs on time because they have too many outstanding debts, overspend, etc. Other individuals who struggle to repay the loan usually do so because their EMIs end up becoming too heavy a burden on their monthly budget. If you have an unexpected financial emergency and require urgent funds, it’s still fine to consider getting a loan to take care of the issue. However, the main consideration to keep in mind is your monthly EMI amount and whether you can comfortably afford to repay it.

What CIBIL Score is Required to Get Personal Loan Approved?

Lenders need to ensure that the borrower has the financial capacity to undertake and repay their loan before they can approve of the application. CIBIL scores help to assess their risk of default. A high score indicates that you have demonstrated the ability to repay your credit card payments and EMIs in a timely fashion, whereas a lower score implies the opposite; thereby, indicating that you have a high risk of defaulting on a loan.

What if I don’t have a CIBIL score?

CIBIL score is just like a report card of your credit history. It is calculated on the basis of parameters such as your history of credit, type of credit availed, repayment behaviours, and other such factors. Having a long history of credit makes it easy for lenders to take a better decision on offering a loan to the borrower. However, many borrowers do not have prior credit history, which can make them wonder if they’ll be eligible for getting a loan. If you don’t have credit history, the good news is that you will be eligible for a loan! In such a situation, lenders will assess the borrower’s age, income, financial stability and job stability.

How to Get a Loan with No CIBIL Score

It’s easier to have access to credit products like personal loans and credit cards when you have a CIBIL score. However, if you require urgent funds, there are some ways to get a loan without having a CIBIL score. One of the main things that your lender will check is your income and spending habits. If you don’t have a CIBIL score but earn a modest income, you’ll have a stronger chance of getting approved as long as you maintain a decent balance with your income and spending. Also, the longer you’ve stayed with a particular employer demonstrates job stability and therefore a stable source of income. This will make the lender more willing to offer a loan to the borrower if there has been a regular, stable income for at least 6 months from a single employer.

Another option of getting a loan without prior credit history is by applying for a securedcredit card that is issued against a fixed deposit by the borrower. The card can be usedjust like a regular credit card. By paying the bills on time, one can increase their CIBILscore.There are some companies that have partnered with banks for their employees. Youwould be more likely to get approved for a credit card if you apply from a bank that hasan existing relationship with the company you’re working for. Utilize the credit cardresponsibly for by paying your bills on time to increase your CIBIL score.


There are various things that lenders look at when they check a borrower’s loan application. Even if you don’t have a CIBIL score, you may still be eligible to get a loan, depending on the lender you apply from. However, having a CIBIL score -specifically, a high score- holds a lot of weight on your loan application form as a borrower. Start by building your credit score via responsible spending on a credit card, and paying the EMIs on time to skyrocket your score.

Snneha Lukka

october 10, 2019

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