Creditworthiness Demystified: The Good Range for CIBIL Score - Loan Trivia


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Monday 12 February 2024

Creditworthiness Demystified: The Good Range for CIBIL Score

In facilitating quick loan approval and chances of one availing of a loan on the most beneficial loan terms and conditions, an individual's CIBIL score plays a determining role. The CIBIL score is a three-digit number that helps borrowers decide a loan applicant's creditworthiness, repayment capacity and dedication towards repaying one's loan EMIs and credit card bills on time. TransUnion CIBIL is the most popular credit information agency in India. It collects information on credit users from different financial institutions and based on this information, it assigns CIBIL scores to each credit user. An individual's CIBIL score takes into account five factors: repayment history, credit utilization ratio, age of credit, credit mix and hard enquiries under one's name. It can range from 300 to 900. Here we look at different CIBIL score ranges and what they mean.  

Different CIBIL Score Ranges and What They Mean

1. Excellent (800 to 900) 

An excellent CIBIL score is the mark of a highly reliable and trustworthy borrower. Such a credit score belongs to people who have always paid loan EMIs and credit card bills on time, maintain their credit utilization ratio under 40%, maintain a healthy mix of both secured and unsecured loans and are not excessively dependent on credit. These are also people who have been using credit for quite some time now and are good credit users. 

2. Good (700 to 799) 

A CIBIL score in this range can help borrowers avail of a housing loan on the most ideal loan terms and conditions. However, some lenders do not show much keenness in negotiating loan terms and conditions if the loan applicant's CIBIL score is below 750 and above 700. In India, to be eligible for a loan of any type, a loan applicant must have CIBIL score above 750. Such a credit score ensures quick loan approval as well as the ability to negotiate the loan terms and conditions. A credit score in the range of 700 to 749 leads to quick loan approval but may not give the loan borrower the ability to avail of the loan on the terms and conditions that are favourable to the borrower.

3. Average (600 to 699)

A CIBIL score in this range is not considered ideal. Such a CIBIL score belongs to borrowers who have made some credit-related mistakes in the past. These are people who either do not have a very clean repayment history or are excessively dependent on credit. The reason behind their low CIBIL score could also be an unhealthy mix of secured and unsecured loans or a rather new credit history. In any case, such a credit score is not considered ideal for borrowing money as it takes away from borrowers their ability to negotiate for better loan terms and conditions. If you have an average CIBIL score, you can enhance your chances of getting approved for a loan by adding a co-borrower or buying insurance.

4. Below Average (500 to 599) 

If your CIBIL score is in this range, getting approved for a loan won't be easy for you. Such a CIBIL score tells lenders that the loan applicant cannot be trusted with repayment of loan money for they are excessively dependent on credit or have defaulted on loan repayment in the past. They could also be people with a relatively new credit history or people who have often made the mistake of applying for too many loans together. People with such a CIBIL score find it quite difficult to get approved for a loan in India. Even adding co-borrowers with excellent creditworthiness may not do the trick.

5. Poor (Below 499) 

If your CIBIL score is in this range, it is impossible that you will get approved for a loan. The only thing you can do to avail of a loan with such a CIBIL score is work on how to improve cibil score first and then apply for a loan.

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