Is your CIBIL score getting you down?
The first criterion which is used to determine the eligibility for any kind of loan is the credit score prepared by CIBIL Credit Information Bureau, India Limited. CIBIL score is a three-digit numeric summary of your entire credit history, based on monthly information provided by banks and other financial organizations. It is usually in the range from 350-900 where having a score of above 750 makes you a decent and reliable borrower. The higher your CIBIL score, the more are your chances of getting a better deal on your loan.
CIBIL score majorly depends on the following factors:
- Payment History: Delayed payments, dues or defaulting EMIs could negatively affect the score.
- High utilization of Credit Limit: Increased spending might not directly affect the score but the increasing current balance of your credit card may seem like a repayment burden thereby negatively affecting your score.
- A Higher percentage of Unsecured Loans: Having a higher percentage of unsecured loans such as credit cards,https://www.iifl.com/personal-loans" style="text-decoration:none;" target="_blank"> personal loans etc, than secured loans such as auto loan, https://www.iifl.com/home-loans" style="text-decoration:none;" target="_blank">home loan etc. could negatively affect the credit score. Therefore, it always important to strike the right balance.
- Multiple loans and Credit Cards: Multiple loans and credit cards show an increased debt burden which can lower the score, and should be avoided.
How to be eligible for a loan despite a low CIBIL score?
But this does not remain the only criteria for a bank loan. The following could be a few criteria which could help to be eligible for a loan despite a low CIBIL score:
- Good and stable source of income: A good and stable source of income always counts as a plus point as it depicts your ability to repay the loan, and then even a low CIBIL score would not count much.
- Timely Filing of Taxes: Being a regular tax payer could also work in your favour. Show the tax receipts of the last 3 years to the lenders and it would be an additional point which would show your sincerity to the lender, and thereby assure them of repayment from your end.
- A secured job with better career prospects: A secured government job or a stable job with a reputed MNC would prove that you are gainfully employed with a growth in future prospects. You could show the salary slips of past 6 months to assure the lender of your repayment abilities.
- Good bank balance: A good bank balance could largely prove the seamless repayment ability even in the time of crisis. For this, you could produce the bank statements of last 6 months and it could help you be eligible for a loan despite a low CIBIL score.
In a nutshell
CIBIL score is important and plays a significant role in getting a loan sanctioned but it does not remain the only criteria for the eligibility of loan sanction. It is always better to keep at least a medium CIBIL score by keeping a check on the factors, but one could even be eligible with a low score by keeping above points in your favor.