You may have heard of a phrase often- A stitch in time saves nine. Nowhere is it more relevant than when you apply for a personal loan. Wondering what we are referring to? Your credit card payments of course! If you look at the basic personal loan eligibility guidelines across a wide spectrum of lenders in India, you will notice the importance given to credit scores. And what is one of the biggest determinants of credit scores? Timely credit card payments and a good credit history without a doubt! 

Hence, clearing your credit card payments on time will naturally enhance your personal loan eligibility at not only the best loan app in India, but everywhere else! 

What constitutes a good CIBIL score? 

A good CIBIL score is usually between 750-900. CIBIL scores are assigned between 300-900. 

Why does your CIBIL score impact your personal loan application? 

Your personal loan eligibility does depend on your CIBIL score for the following reasons: 

  • Your CIBIL score demonstrates your creditworthiness and history of credit management over the years. 
  • It indicates whether you repay or have repaid your credit card dues and other loans without any defaults. 
  • It also shows the nature of your credit portfolio, i.e. the balance between unsecured (loans/debt without collateral such as credit cards and personal loans) and secured debts (home loans and car loans among other loans secured by collateral). Your credit report also indicates your total debt which lenders may assess against your total income. 

Reasons for low CIBIL scores

Wondering what the reasons for low CIBIL scores are. Read on to know more.

  • Outstanding dues on credit cards, with many customers not making timely bill payments every month and only paying the minimum amount at times. This leaves outstanding credit card dues, lowering credit scores greatly. 
  • Too many credit cards or loans automatically count as borrowers being hungry for credit, especially since each enquiry made by a lender is taken as a hard enquiry. Excessive hard enquiries naturally reduce the credit score. 
  • High usage of credit is another dampener for your credit score, i.e. when you end up using more than 30% of your credit card limit. 
  • Repayment delays like missing credit card payments, EMI payments and defaults will reflect in the CIBIL score as well. 

How low CIBIL score concerns your personal loan application

As you can see, not repaying your credit card payments on time, skipping or defaulting on payments, simply paying the minimum amount and using almost your entire credit limit are red flags as far as your credit score and history are concerned. This naturally leads to a poor CIBIL score, which automatically impacts your personal loan eligibility

Since personal loans are unsecured loans, lenders place a higher emphasis on the credit scores of borrowers. A low score and a poor history of credit card management will automatically render you less eligible for your personal loan. 

What should you do?

If you are thinking of applying for a personal loan, make sure that you are updated with your credit card payments. Aim to clear full payments before the due date each month, while maintaining zero outstanding balance and using only a fraction of your credit limit. This will push up your credit score and enhance your eligibility for the personal loan. 

Other eligibility conditions

New age loan apps in India, namely PaySense have other eligibility criteria like the following: 

  • You should be an Indian resident. 
  • You should be between 21-60 years of age. 
  • You can be self-employed or salaried. 
  • You should earn at least Rs. 18,000 (salaried borrowers) and Rs. 20,000 (self-employed borrowers) per month. 

Once you meet all these conditions, dash off your application and follow the procedure as asked and get your personal loan without any hassles. 

How you benefit from PaySense

  • Personal loans up to Rs. 5 lakh with simplified processes for borrowers. 
  • Instant eligibility checker online
  • Swift loan approval and disbursal with minimal and paperless documentation. 
  • Convenient EMI plans with auto-debit and reminder facilities. 
  • Available for those with zero credit history, i.e. those who have never taken a loan or credit card before. 
  • Quick three-way process- Check eligibility and choose your personal loan plan, upload and sign documents, and get the money disbursed to your account. 
  • Tenures between 3-60 months for personal loans. 

As can be seen, applying for a personal loan at PaySense is a seamless affair. All you need to do is upload the right documents, follow the steps carefully, and ensure that you have a good credit score beforehand. For the latter purpose, clearing your credit card payments on time is a must! 

Kiran Pathak

Kiran loves writing about fintech, banking, insurance, healthcare, wellness, travel, lifestyle, and parenting. By day, she is juggling strategy calls and meetings with clients that compelling content is the only way forward and in her spare time, she is raising awareness about the evils of plastic or backpacking with her husband and 2 sons.

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