CIBIL Score Update: When applying for a loan—whether for a dream home, higher education, or a wedding—your CIBIL score plays a crucial role in approval. A high CIBIL score increases your chances of securing a loan quickly, while a low score can lead to rejection. But what exactly is the minimum score required? How can you maintain or improve your creditworthiness? Let’s break it down in simple terms.
What Is a Good CIBIL Score?
Your CIBIL score (or credit score) is a three-digit number ranging between 300 and 900, reflecting your creditworthiness. Banks and lenders rely on this score to determine:
- Your repayment capability
- Risk of default
- Loan approval chances
A score above 700 is generally considered good, while 750+ is excellent. If your score is below 650, lenders may hesitate to approve your application.
Why Does a Low CIBIL Score Affect Loan Approval?
A poor credit score signals financial instability to banks. They fear:
- Delayed repayments
- Loan defaults
- Higher risk in lending
This makes them reject applications or offer loans at higher interest rates.
How to Improve a Low CIBIL Score?
If your score is low, don’t panic. Follow these proven strategies to rebuild your credit health:
1. Pay EMIs & Credit Card Bills on Time
- Late payments severely damage your score.
- Set reminders or enable auto-payments to avoid missing deadlines.
2. Use Credit Cards Wisely
- Avoid maxing out your credit limit.
- Experts recommend using only 30-40% of your available limit.
3. Avoid Multiple Loan Applications at Once
- Each loan application triggers a hard inquiry, lowering your score.
- Apply for a new loan only after clearing existing debts.
4. Borrow Only What You Can Repay
- Higher EMIs increase the risk of defaults.
- Stick to loans that fit your monthly budget.
5. Regularly Check Your CIBIL Report
- Errors in your report can unnecessarily lower your score.
- Monitor your credit report annually and dispute inaccuracies.