Once you’ve found the right loan and you’ve got your loan amount sorted, the only thing left to do is ask yourself: What is your credit score? The Personal Loan Credit Score will play a huge role in your approval, how much you can borrow, and how much you’ll pay monthly. Let’s take a look.
What Is a Credit Score, in Simple Terms?
A Credit Score is a three-digit number. In India, it can range from 300 to 900. Lenders look at this number to assess risk. A high score will show that you’re a responsible borrower who pays on time, whereas a low score will make them cautious. You won’t get a high score based on how much you earn; however, it will depend on how responsible you are with repayment.
From a lender’s point of view, they cannot see how responsible you are with your money. They can, however, look at your Credit Score. This will tell them if you pay on time, how much of your limit you’re using, and how many applications you have.
What Score Gets You Approved?
A good CIBIL Score for a personal loan will usually start at 700. Most lenders look for between 700 and 900; however, this can vary. Below are the ranges.
| Score range | Category | What it means |
| 300 to 549 | Poor | Missed EMIs and defaults lead to rejections and very high rates |
| 550 to 649 | Fair | Irregular repayments limit loan options |
| 650 to 699 | Average | Smaller personal loans at average rates |
| 700 to 749 | Good | Better offers and faster approvals |
| 750 to 799 | Very good | Strong behaviour, higher approval chances |
| 800 to 900 | Excellent | Quickest approvals and lowest rates |
Other loan types often have different requirements. For example, Home Loans often look for a score of 750+. Car Loans and Credit Cards look for a score of 700+. Smaller loans or Consumer Durable Loans might have a slightly lower requirement, looking for between 650-700+. These are just general guidelines and will vary depending on each lender.
How Is Personal Loan Eligibility Decided?
In addition to your score, lenders will look at your income, how many EMIs you’re currently paying, how stable your job is, and your age. Once you have a good score, you’ll pass the initial Personal Loan Eligibility criteria. They will then look to see if you can afford the new EMI with your current income.
How Does Your Score Change the Interest Rate?
Lenders will charge you based on risk. If you have a good score, you’ll often get a lower rate. If you have a low score, you’ll be paying more. For example, if you have a loan of ₹3,00,000 for 24 months at 12%, you’ll be paying around ₹14,122 per month and paying total interest of around ₹38,900. However, if you have a loan of the same amount for the same period of time at 18%, you’ll be paying around ₹14,977 per month, and your interest will be around ₹59,400. This has increased your payment by around ₹20,500. These are just examples of the rates. Even a small difference in rate can make a big difference in Rupees. Always do your calculations.
Interest Rates on Personal Loans in India will vary depending on the lender, loan amount, and your profile. Different banks, NBFCs and fintech apps will charge different rates based on risk. Always look at the rate, processing fee, and how long the loan will last. Having a score of 700+ will give you more flexibility.
What Shapes Your Score the Most?
| Factor | Weight | What it means |
| Payment history | 35% | Late EMIs and card dues lower your score |
| Credit utilisation | 30% | Using above 30 per cent raises risk |
| Credit age | 15% | Longer history adds stability |
| Credit mix | 10% | A balance of secured and unsecured loans helps |
| Hard enquiries | 10% | Too many applications lower the score |
Which Mistakes Hurt Most?
The main issue will be if you miss any EMIs. Missing even one payment will greatly reduce your score. Using your credit card to its limit will also affect it. This shows you’re using a lot and could be a sign of stress. Applying to too many lenders within a short period of time will create hard inquiries.
How to Improve Credit Score Before Applying?
People often search this question, “How to Improve Credit Score?” on the internet. Start improving your score 3-6 months in advance. Pay all of your EMIs and card payments on or before the due date. Try to keep your utilisation below 30%. Don’t apply for anything new. Try to keep your old accounts open. Check your report for any issues, and if there are any, raise a dispute. Slowly try to reduce your outstanding loans. Little things all add up! Your score will update as more data comes through.
How Do You Check Your Score Online?
Checking your Credit Score is easy. Using the Olyv app, simply enter your mobile number and OTP. Then join Olyv Plus. From here, you can check your score from your dashboard. You’ll be able to view your report, showing how much you’re utilising, how many loans you have open, how many inquiries you have, and how responsible you are with repayments. Olyv Plus will also notify you if there are any changes to your report. Check your score before applying and every 3-6 months.
What If Your Score Is Low or Missing?
Having a good Credit Score for Personal Loan will help; however, if you have a low score, lenders may offer you less, higher rates, or ask you to come back later. Use this time to improve your habits. Once you’ve improved, you can reapply. If you have no score at all, you can start building one up by taking small steps such as getting a secured card or a small loan.
Should You Wait Before Applying?
If your score is below 700, it may be worth waiting a few months to save some money. Improve your score and reapply. However, if you need the money now, look at the offers and choose a smaller amount. Applying to too many lenders in a short space of time will create more hard inquiries.
Quick Answers
Does income affect my score?
Ans. Not directly. Repayment history does.
Can I get a loan without a score?
Ans. Yes, with a smaller amount or a higher rate.
What lowers my score?
Ans. Late EMIs, high utilisation, and many enquiries.
What is a good CIBIL Score for a Personal Loan?
Ans. Aim for 700 or higher, and keep improving.
Your score tells a story to lenders in seconds. Make sure it’s a good one! Check your report, sort out any issues, pay on time, and apply when you’re ready. This is just general information and not financial advice.
