Help and Advice

Why Banks Demand A 750+ CIBIL Score For Loan Applications

What CIBIL Score Do I Need For Loan Applications?

Loan Applications Generally Need A 750 CIBIL For approval

There is a distinct difference between a ‘good’ CIBIL score and a ‘great’ one. Anything 750 and over falls into the latter category and this is what you want your CIBIL score to show. Why do banks ask for this lofty number before they give out a loan?

  • One of the core ideas of the banking system is to keep the financial world regulated, using small or large factors to help the ‘global cash machine’ run steady. That means preventing over-borrowing on several different fronts.
  • Imagine if you took out more than a handful of loans the previous year. Granted, you had need of them, but the same will reflect on your CIBIL score.
  • You approach a bank with this score and they will immediately take you to be ‘credit hungry’. It does not matter whether you paid back those loans on time or have defaults adding to the ‘bad image’.
  • You have officially become a risky loan candidate, one who is prone to keep taking loans and maybe pay them on time.
  • A low score is inspired by such activities, which is one more reason why banks want a high 750 or more. A credit hungry scorer will not reach this number no matter what they try.

The system is foolproof unless someone comes up with an ingenious way to hack it. CIBIL scoring is not merely done by machines but by actual people as well, adding to its security. These professionals add ‘comments’ to your report and your loan applications. These are not their own words or notes but those of your lenders.

Lots of banks grant you the chance to settle loans for a little lower cost than every EMI pertaining to your case combined; they can even offer reductions in interest rates. Whatever they choose from a bagful of alternatives to help your debt-closure cause, you will be tempted to find other ways to close your loan and often you will come across outside options.

This certainly goes against the loan’s terms but the bank will be open to it because it helps close your debts. However, there will be a note made in your report; ‘written off’, ‘settled’, ‘DPD‘ or days past due, when you pay a certain amount after the due date.

Any of these circumstances will lower your CIBIL score. That 750 mark is not as easy to attain as you may have assumed.

  • The core reason why banks demand 750 or higher on a potential card owner’s CIBIL score is because they want to limit risk as much as possible
  • If your credit history clearly proves you to be a payment defaulter, credit hungry, prone to over-leveraging, in possession of an inadequate tax-history, and so on, your chances of stamping paid on that loan application will be very small

Manage your finances, actively so. Keep things in order, tie up loose ends, sacrifice where you need to, and you will gain that enviable 750 CIBIL score rating that most other people just cannot seem to bag.

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