The phrases “CIBIL Score” and “credit history” are certainly familiar to you. Your creditworthiness is expressed numerically by your credit score. This score, which has three digits and goes from 300 to 900, tells banks and other lending organizations if you can afford to pay back the money you borrow.
For instance, despite satisfying most of the requirements, a person who goes to a bank to finance their dream automobile is turned down. A poor credit history, which translates to a score below the minimum threshold, is one of the reasons the bank declines to grant a car loan. A solid credit history correlates with a good CIBIL credit score, which is sometimes a deciding factor in whether a vehicle loan application is approved or denied. Continue reading this blogpost till the end to know about how to get an education loan without CIBIL score.
Must Read: What is the Student Loan Eligibility Criteria for Studying Abroad?
Minimum CIBIL Score for Education Loan
The minimum CIBIL score needed for an education loan is 685. Even so, if it’s not too significant and it’s tied to a credit card, government banks may occasionally accept a CIBIL score of less than 685. The bulk of NBFCs present in India, on the other hand, demand that co-applicants and loan applicants always have a CIBIL score of at least 700.
Importance of CIBIL Score for Education Loan
When deciding whether to study abroad or even in one’s own nation, student loans are one of the most crucial considerations. Education loans can be your lifeline and support you at every level of your financial need as the expense of higher education rises nowadays. The CIBIL score is the most crucial criteria for obtaining a loan, but there are many others as well. Since there is a connection between a CIBIL score and an education loan, it is reasonable to conclude that your CIBIL score affects your ability to borrow money for college.
One of the most important considerations for an education loan is the applicant’s and co-applicant’s credit history. The credit score may often range from 300 to 900. Even though a minimum CIBIL score of 750 or above is required for schooling since it is optimal for earning a higher degree, loan acceptance would be challenging for candidates with CIBIL scores below 600.
When applying for an education loan, a student’s CIBIL score is crucial, but if you lack one, the lender will base their loan conditions on the CIBIL ratings of their co-borrowers. Your chances of getting financial help might be improved by meeting the lender’s other qualifying standards and having a high CIBIL score.
Also Read: Education Loans for Abroad Studies in 2023
How Credit Score Can Impact Student Loan?
If you’re wondering if taking out a student loan would affect your CIBIL score, the answer is yes. Education loans, like other loans, affect your credit score if they are returned on time; if they are paid late, your score may be negatively impacted. The bulk of student loans are repaid in installments over a defined period of time. You begin to establish a history as a result of the lender reporting this to credit reporting companies.
When you pay your bills on time, you’ll begin establishing a solid track record for handling credit. However, the following CIBIL score levels are suggested for students wishing to get an educational loan to study abroad:
| Range | Loan Probability |
| 300 – 599 | Review your financial documents again, CIBIL score less than 600 is considered a bad score and this might reduce your chances of getting approved for an education loan. |
| 600 – 749 | You’re eligible for an education loan, however NBFCs and financial institutions get careful about loan applications. |
| 750 and above | You will not have any trouble in receiving an education loan. |
How to Improve CIBIL Score for an Education Loan?
The following are possible causes of education loan without CIBIL score as well as suggestions for how to raise it:
Overuse of credit limit: Using up all of your available credit shows that you are unable to control your expenditures. Try to keep your balance between 30 and 50 percent of your total credit limit. You’ll use credit less as a result, improving your credit score.
Late and unsuccessful payments: Your CIBIL score will drop if you frequently forget to make payments on credit or loans or postpone making them. Set up reminders to pay back all borrowed money on time; this will help you build credit and get better loan conditions in the future.
Rejected loan applications: If your loan application was turned down, don’t try again right away. As your credit score declines with each loan denial, there will be a higher chance of a fresh loan denial in such situations. Improve your credit score as a top priority to be eligible for loans. You can then file a loan application with better conditions after doing this.
Timely payment of current debts
If you have a history of paying your present expenses—such as electricity bills, credit card EMIs, and credit card payments—on time, getting a loan will be simpler. Therefore, before applying for an education loan, be sure all of your current debts have been paid.
Show Income Verification
The ability to repay the loan will be demonstrated to the creditor by the candidate’s stable income. The borrower’s capacity to repay even with a poor credit score is shown by providing proof of income.
Make a secured student loan request
When you apply for a secured student loan, your credit score will be given less weight. It is impossible to overestimate the significance of the value of the pledged property.
Fix omissions or mistakes on credit reports
The best approach to prevent your bad credit score from ruining your chances of getting a loan is to fix the errors. The report can include a mistake or an error. Check your credit report every six months to make sure this doesn’t happen again.
Must Read: 5 Things to Keep in Mind to Apply for an Education Loan
Things to Keep in Mind Before Applying for Education Loan Without CIBIL Score
When you apply for a student loan to pay for your study abroad adventure, the next four factors will be of assistance to you.
- Before requesting a student loan, it is crucial to follow the right guidelines and fully understand the university courses.
- Monitor your CIBIL score and its report before borrowing money from a bank or other financial institution.
- Always keep an eye on the loan amount and the conditions attached to it.
- Always give interest rates and moratoria significant thought.
Must Read: Education Loan Without Collateral
FAQs
The minimum CIBIL score required for an education loan is 685.
You can offer the lender collateral in lieu of the money for getting a personal loan without CIBIL score.
As per the preference of HDFC bank applicants must have a credit score of 750 and above.
We have covered the Education Loan without CIBIL score. Visit Fly. Finance to know more about such topics.
