Just like in any other loan application, CIBIL score is taken into consideration while reviewing education loan applications. Lenders check your creditworthiness to assess your capability to repay the loan.
Let’s start with understanding what CIBIL is.
CIBIL or Credit Information Bureau (India) Ltd is the authorized agency that provides credit records and scores to banks and money lenders to help them assess if a borrower would be able to repay the loan. All your credit information is provided to CIBIL on a monthly basis. This includes information on your EMI and credit card payments (including any late or missed payments), balance outstanding, any change in your total credit limit, and all other details relevant to your credit profile. CIBIL makes a summary of all your credit history in the form of a three-digit number which ranges between 300-900. A high score indicates you are a less risky borrower which increases your chances of availing a loan whereas a low score decreases your probability of getting a loan. Here’s a summary of loan worthiness based on your score: -
300-599 – A score below 600 is considered very low. Your chances of getting a loan with such a low score are next to impossible. Try to improve your credit score before applying to any bank as a bank rejection would further decrease the score.
600-749 –A score less than 750 is not considered good but some money lenders who are ready to take a risk might sanction your loan. But it will be solely based on your repayment ability, such as your employment, salary, if you have any other loan going etc. Make sure you approach the right bank/NBFC to save yourself from a rejection.
750 and above –Congratulations! Your CIBIL score would create no hindrance in obtaining an education loan. Having a score higher than 750 means you have been good with finances now it’s time to reap the fruit. There are other advantages of a having a high score: the approval process will be faster; the interest rate could be negotiated since you are the customer no bank wants to lose.
If your CIBIL score is lower than 700 here are a few things you can do: -
Avoid approaching public banks if your score is lower than 700. Each inquiry for availing a loan will have an effect on your CIBIL score. The chances of getting a loan from a public bank with a credit score less than 700 are very bleak so there is no point in inquiring anyway. But don’t worry, there are certain NBFCs that can give you a loan with a credit score of 650. It would be better if you have a genuine reason to state to the lenders. It might help you to be a slightly better rate of interest.
You should always check your CIBIL score before approaching any financial institute. Since each inquiry affects your score, going to multiple banks/NBFCs is not the best option, but how will you compare different banks and get the best ROI? Credenc is here to help! Credenc provides a Single window platform i.e., the borrower can compare and choose from different banks and NFBCs to apply from without physically going to the banks. Our team will make sure you get a quick approval with the best rate of interest.