Purchasing a new car is a big step. Therefore, most people prefer applying for a car loan. However, you must not disregard the most important aspect when applying for this loan. Your CIBIL Score online is vital for lenders, and many may not approve your loan if you have a poor Credit score.
What Is The Minimum CIBIL Score Required For Car Loans?
The Credit score range starts from 300, and the maximum possible score is 900. The score range is divided into five categories according to loan approval probability.
- Less than 600 – Low Probability
- 600 – 649 – Difficult
- 650 – 699 – Possible, but there may be a high-interest rate on loan.
- 700 – 749 – High Probability
- 750 – 900 – Very High Probability
Most lenders require a minimum score of 700 to approve a car loan application. However, if you have a score of 750 or above, the lender may approve the loan at a low-interest rate. Moreover, a score of 750 or above can help you get it approved if you are applying for a high loan amount.
How To Check Your CIBIL Score Online?
You can check your Credit Score online through the CIBIL website or any other reliable website. In addition, you can get one free CIBIL report annually from the official CIBIL portal. In addition, however, you can get free reports from other lenders.
You can generate your CIBIL report in the following way:
- Go to the Credit Score Report page.
- Fill in your details. (Name, date of birth and contact number)
- Fill in your financial details. (Annual income, employment status, PAN number)
- Enter your city name and select your gender.
- Click on submit.
Factors That Affect CIBIL Score
Multiple factors affect your Credit Score. Some of them are:
- Credit History: Your credit history significantly affects your CIBIL Score. Your credit history includes your past and current credit lines.
- Repayment History: Missed or late repayment of loans can majorly affect your Credit score.
- Credit Limit Utilisation: CIBIL Scores can vary according to your borrowing habits and utilisation of the approved credit limit.
- Frequency of Credit Application: The number of times you apply for loans or credit cards can affect your Credit Score negatively or positively.
How To Improve Your CIBIL Score?
There are several ways to improve your Credit Score.
- Check your CIBIL Score online to find out errors or discrepancies for correction.
- Ensure timely repayment of loan and credit bills.
- Avoid using the maximum credit limit amount.
- Opt for long loan tenures and mixed credit lines.
- Avoid applying for multiple credit cards or loans at a time.
- Avoid increasing your credit card limit frequently.
Benefits of Having a High CIBIL Score For Car Loan
A high Credit Score can be very beneficial if you apply for a car loan. A high Credit Score can provide you with a better car loan opportunity. For example:
- If you have a high CIBIL Score of 750 or above, the lender may offer you a car loan at a much lower interest rate.
- If you are seeking a high amount for a car loan, the lender may approve it if you have an excellent credit score.
- Your CIBIL Score affects how quickly your car loan will get approved. A high Credit Score can help you get your loan approved without any hassles.
Therefore, a high CIBIL Score is the best way to get your loan approved. However, then question arises how to improve CIBIL score as improving your Credit score, takes a long time, and it is best to be consistent with maintaining a high score. If you meet the minimum Credit Score requirement of lenders, you can get a car loan without any issues.