July 20, 2024

TransUnion CIBIL, the most popular and oldest credit information agency in India, studies credit users and how they use credit or how responsible they are towards its repayment. Based on the analysis, they assign a score ranging from 300 to 900 to every credit user. 

This credit score is known as the CIBIL score and lenders consider it important as it very accurately represents the creditworthiness of a loan applicant. 300 is the worst credit score a person can have and 900 is the highest on the spectrum. 

Individuals preparing to apply for a loan must understand different CIBIL score ranges and what they mean for loan approval. 

Different CIBIL Score Ranges Explained 

Excellent (750 to 900) 

There are a few simple things you can do to maintain the best CIBIL for home loan. Paying all your loan EMIs and credit card bills on time, not using your credit cards recklessly, not having too many hard enquiries under your name, and having both secured and unsecured loans under your name are some of these things. 

People who do these have an excellent CIBIL score. These individuals can be trusted with timely repayment of loan money and are very unlikely to default on loan repayment. Therefore, when individuals with a CIBIL score in this range apply for a loan, loan approval comes easily and quickly. 

Further, lenders are more than willing to negotiate on the loan terms and conditions with such individuals. A CIBIL score in this range can make life easier for those planning to apply for a loan.

Good (650 to 749) 

Individuals with CIBIL scores in this range are people who have made small credit-related mistakes in the past, such as missing loan EMIs or credit card bills or applying for too many loans simultaneously. 

However, lenders understand that these individuals can be more or less trusted with timely repayment of home loan EMIs. Therefore, when individuals in India with their CIBIL scores in this range apply for a loan, loan approval comes quickly. 

However, with such a CIBIL score, lenders are not always quite keen on discussing the loan terms and conditions or bending them to your liking. In other words, with such a CIBIL score, you may have to agree to whatever loan terms and conditions your lender extends you. 

The good news is that pushing one’s credit score from the good to an excellent category does not take a lot of time and is quite possible. So, if your CIBIL score belongs to this CIBIL score range, it is better to wait and improve your CIBIL score and then apply for a home loan. 

Average (500 to 649) 

If your credit score belongs to this category, you are someone who has made some major credit-related mistakes in the past, such as continuously maintaining a high credit utilization ratio, not paying your loan EMIs for an extended period or having a very high debt-to-income ratio. 

With such a CIBIL score, lenders will see you as a person who cannot be entirely trusted with timely repayment of loan EMIs. They will doubt your creditworthiness and loan approval will be difficult to come by. If you do get approved for a loan, it will only be after you agree to add someone as a loan guarantor or co-borrower. 

Your lender may even ask you to buy insurance to offset the risk. Further, doing all this may get you access to a loan. However, you will find yourself paying the loan on terms and conditions highly unfavourable to you. 

Your lender will most certainly charge you a very high rate of interest and you may even be asked to repay your loan over a tenor that doesn’t work well for you. If your CIBIL score is in this range, it’s best you improve your credit score first and then apply for a loan.

Poor (300 to 499)

If your CIBIL score is in this range, getting approved for a loan will be nearly impossible. Your credit score reflects very low creditworthiness and repayment capacity. You are someone who has defaulted on loan repayment in the past and therefore, no lender will trust you and therefore, sanction you a loan with a score belonging to this credit score range. So, if your score is in this range, you must first improve your score and then apply for a loan.

Final Word

It does not matter what loan you are planning to apply for, make sure to have an excellent credit score to make the process of loan repayment easy and straightforward. 

Leave a Reply

Your email address will not be published. Required fields are marked *