What you need to know about getting a personal loan with a 720 CIBIL score

As you get ready to apply for a personal loan, you will receive prompts to check your CIBIL score. You may wonder, what score is a good credit score? If you stand at 720, congratulations, you are in a favourable position as a borrower. It indicates a stable credit history with good repayment behaviour. Whether it is good enough for getting a personal loan depends on a few critical factors we’ll unpack in this blog.

Is 720 a good CIBIL score for personal loan approval?
 

Your CIBIL score of 720 is indeed a good score to attract lenders’ attention. It will help you qualify for a personal loan easily. Loan providers will generally view you as a responsible borrower and take note of your consistent repayment discipline.

Here’s what you can expect with a CIBIL score of 720 while getting a personal loan:

· High approval chances: Your chances of getting an approval on a personal loan is high.

· Favourable loan terms: The loan terms like the interest rate, sanctioned loan amount, and repayment terms, are mostly favourable as you can negotiate a good CIBIL score for a loan.

· Assessment of necessary details: Besides your CIBIL score, lenders will also assess your age, income stability, and existing obligations to process your application.

· Good score with room for improvement: Lenders generally view a CIBIL score of 720 within the range of good. For better and more preferential offers, they consider applicants with a higher score. Typically, between the best CIBIL score range, 750-900.

· Pre-approved loan offers: You can get pre-approved loan offers from your existing bank as you show reliable creditworthiness with your high CIBIL score.

· Flexible eligibility criteria: If your income and existing debt are well-managed along with your high CIBIL score of 720, lenders are likely to relax other eligibility conditions, such as reducing the need for a co-applicant, excessive documents, collateral, and more.

How to Improve a 720 CIBIL Score to a range of 750-900?
 

Your CIBIL score of 720 is high. It is a good place to be as a prospective borrower. But, if you want to qualify for the best offers, like the lowest interest rates, relaxed terms, and a higher loan amount, try going higher. You can aim for the best CIBIL score range of 750-900.

Improving your CIBIL score doesn’t require drastic steps. Here are some consistent approaches you can consider for a better CIBIL score:

· Always repay on time

Your repayment history has the strongest impact on your credit score. Missing or delaying payments of your EMIs and credit card bills dents your high CIBIL score. Hence, it is critical to prioritise timely repayments. If you have a hard time keeping track of them, you can set payment reminders or automate transfers before the due date.

· Keep your credit utilisation low

Using more than 30% of your total available credit signals your financial over-dependence on credit. Hence, it is good to have a high credit limit but reduce the utilisation. Try to pay off balances promptly. When you rely less on credit, you show responsible financial management. This helps in improving your CIBIL score.

· Check your credit report

Errors in your credit report, like incorrect loan entries, outdated information, or wrongly recorded defaults, can lower your credit score without your mistake. You can avoid this by reviewing your credit report every few months and raising disputes when you spot such errors. When you correct such mistakes promptly, the correction can lead to a high CIBIL score.

· Borrow wisely

When you come across attractive loan offers and easy approvals on credit cards, it’s easy to get tempted. You might even end up applying without the need. Doing so results in excessive debt, which strains your finances. You then end up struggling to repay. All of this is avoidable when you take a moment to understand your affordability and borrow accordingly.

· Increase your credit limit responsibly

Since your CIBIL score is 720, you already have a good repayment record, which means you can request a higher credit limit on credit cards. This is a great strategy to lower your utilisation ratio automatically. It is the safest way to improve your CIBIL score. When lenders see responsible usage with higher limits, it resonates in your credit score.

· Avoid closing old credit accounts

Don’t let your good repayment history go to waste. If you have older accounts, keep them to strengthen your credit profile. Closing them will shorten your credit age, which lowers your credit score. Even if it means making small transactions, continue running such accounts as they help you get to a high CIBIL score quickly.

· Compare and apply for loans consciously

Every time you apply for a credit card or a loan, it’s good to take the final step only when you are sure of the lender. If you blindly apply to as many loan providers as possible in the hopes of finalising the best offer, you attract hard enquiries on your credit report. They temporarily reduce your credit score.

· Have an emergency fund as buffer

Things don’t always go as planned. A sudden mishap or unforeseen event is all it takes to throw your finances off balance. Your well-planned EMI payments also bear the brunt in such cases. Hence, building a buffer for medical emergencies, sudden home and car repairs, etc., helps you tackle such financial setbacks seamlessly. It prevents you from missing or delaying EMI payments and enables you to stay on track of getting to get the best CIBIL score.

Final Words
 

Having a 720 CIBIL score means lenders already see you as a responsible borrower. Thus, getting a personal loan with this CIBIL score is a breeze. Besides easy approval, if you also desire the lowest interest rates and higher loan amounts, you can make small improvements to reach a better CIBIL score. Such steps include timely repayments, low credit utilisation, and other aforementioned tips.

While you work on improving your CIBIL score, you can finance your immediate financial needs with your current score of 720. Many lenders like IDFC FIRST Bank offer instant personal loans starting at 9.99%, with the loan amount going up to ₹10 lakhs, and zero foreclosure charges.