What is the Minimum CIBIL Score Required to Get a Loan?

Last Updated : Feb. 10, 2025, 5:15 p.m.

The CIBIL score is a very important parameter that is checked by lenders before approving your loan and credit card applications. The higher your CIBIL score, the more quickly your loan and credit card application gets approved. However, if your CIBIL score is low, then your loan or credit card application might get rejected. Even if some lenders approve your application, you will have to pay very high interest rates. Before you apply for credit, check the eligibility criteria set down by lenders. If you do not satisfy the minimum eligibility requirement set down by lenders, then do not apply with that lender as you are likely to get rejected. The least credit score criteria varies across lenders. So, find a lender who will accept your credit score. If your credit score is very poor and you cannot apply, take steps to improve your CIBIL score and apply for the loan or credit card. The minimum CIBIL score required differs across lenders and also varies with the type of loan. Let us now understand what the minimum CIBIL score required is to:

Minimum CIBIL Score Required to Get a Loan

A minimum CIBIL score required differs for various loans.

Personal Loans

Generally, a CIBIL score of 730 and above is ideal for personal loans in India. Lenders usually prefer to offer a personal loan to individuals who have a high CIBIL score. This is because personal loans are unsecured and collateral free. So, lenders believe that if your CIBIL score is high, you will pay your dues on time. A score above 730 is considered strong and will be easier for you to obtain loans with favorable terms and lower interest rates. You will get a flexible repayment tenure and desired loan amounts and credit limits. Although some financial institutions may approve a low score in the range of 600 to 700, the loan terms may be stricter. Personal loan options for a score in this range are limited

Business Loans

Having a CIBIL score of 700 plus is ideal for an unsecured business loan with collateral. If you are applying for a secured business loan, then a lower CIBIL score in the range of 600 to 700 is enough. This holds good for any self-employed professional who is applying for a business loan whether it be a chartered accountant, engineer, doctor, lawyer, etc. else a self-employed non professional such as trader or manufacturer. This is because secured business loans are backed by collateral or securities. In case, individuals do not pay the dues on time, the lender can always sell the collateral and recover the dues.

When organizations or companies are applying for a business loan, the business credit score is also taken into account apart from the personal credit score.

Home Loans

In a home loan, the property itself acts as a collateral. So, a lower CIBIL score, below 700 is usually fine for a home loan. Some lenders give a home loan even for a CIBIL score as low as 550. However, the credit score plays an important role in getting the desired loan amount in a home loan. Sometimes, lenders may sanction only 65% or less of the necessary home loan amount if your credit score is low. Hence, it is ideal to improve your credit score and then apply for a home loan.

Free CIBIL Score Check

Tips to Improve Your CIBIL Score

Here are some important tips to enhance your CIBIL score.

• Pay your loan EMIs and credit card bills on time every month. In order to avoid defaults on payments, consider setting up auto pays by giving standing instructions to the bank. Set reminder alerts to prompt you about the due date.
  
• Keep your credit utilization low. Your credit utilization ratio is the percentage of credit used from the total credit limit available. It is recommended to have a credit utilization ratio of within 30% to 40%. A high credit utilization ratio lowers your CIBIL score. Lenders will also get the impression that you are credit hungry.
  
• Monitor your CIBIL report regularly. Checking your CIBIL report periodically helps you identify errors and get them rectified by raising disputes with CIBIL.
  
• Avoid applying for multiple lines of credit. Each time you apply for a loan or credit card, a hard inquiry is triggered. Multiple hard inquiries will impact your CIBIL score negatively.
  
• Do not close old credit card accounts as it reduces the overall credit limit and length of credit history. A long credit history has a positive impact on your CIBIL score. Also, closing old credit card accounts with excellent and long CIBIL history will delete accounts which demonstrate your financial discipline and responsibility to the lender.
  
• Have a diverse credit portfolio with a balanced ratio between secured and unsecured loans.

How is CIBIL Score Calculated?

Here are the factors used in computing the CIBIL score.

• The repayment history (35%)
• The amount you owe to lenders (30%)
• Number of years of servicing debt (15%)
• Number and amount of recent loans taken or applied for (10%)
• The Credit Mix (10%)

If you have a CIBIL score of 750 or above, the approval process will be much faster. The loan amount might be larger, and you might be able to negotiate for a lower interest rate. The whole loan approval process will be much simpler. Those who have a credit score below 750 should work towards enhancing it by following the tips given above.