I have a CIBIL score of 690 and work as a mid-level sales executive with a top pharma company whose CTC is 6.5 lakh per annum. I . I want to take personal loan of 3 lakhs. I have HDFC Bank and Axis Bank credit cards with regular payment history. But I have never taken any loan in the past. What are the chances of my loan approval?
-Name withheld on request
Your CIBIL score seems very low considering your regular repayment history. Therefore, I would first suggest you to check your credit report and pay attention to any errors or misinformation that may lower your credit score.
For most banks and major NBFCs, a CIBIL score of 690 would be at the bottom of their comfort level. Banks and large NBFCs generally prefer to lend to individuals with credit scores of 750 and above. Since personal loans are unsecured loans, lenders place more emphasis on credit scores than others when evaluating personal loan applicants. Although some NBFCs and fintech lenders approve personal loans to people with credit scores below 700, their interest rates are usually higher.
Lenders also consider other factors during the appraisal process, including the applicant’s business profile, EMI/NMI ratio, employer’s profile and age. EMI/NMI ratio refers to the ratio of your net monthly income spent on servicing your EMI(s), including the EMI of your new loan. Thus, your business profile, employer profile and your zero EMI liability can work in your favour.
I would also suggest you check out the loan options for credit card offers, if any, available from your existing card issuer. Credit card loans are pre-approved loans given to existing credit card holders who have a good credit profile and clear repayment history. These loans have instant disbursement and are almost similar to personal loans in terms of product features.
Then, on the availability of a personal loan, approach the bank(s) with which you maintain a savings account(s) or fixed deposit. Many banks offer loans to their existing account holders at preferential interest rates.
Lastly, visit an online financial marketplace to compare available personal loan offers with other lenders. Such marketplaces allow you to compare loan offers from multiple lenders including small NBFCs and fintech lenders, without adversely affecting your credit score.
Once you have all the options available, evaluate them and choose the credit option and disburse the loan tenure with the lowest interest rate and TAT suitable to you.
Naveen Kukreja, CEO and Co-Founder of Paisabazaar.com answered this question. Questions and thoughts at mintmoney@livemint.com
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