Nowadays, most of the students are looking forward to an education loan in order to fund their education. The process of getting an education loan has also become very simple and hassle-free in recent years. Moreover, the banks offer education loans at a very low rate of interest. However, all of this is subjected to one condition that you have a good CIBIL (credit score) rating.
Most of the public and private sector banks like SBI, HDFC, and ICICI refer to the customer’s CIBIL Score in order the check his/her credit history. As per the reports, 90% of the loans are granted to the applicants having a CIBIL score above 750. This shows that if you have a higher CIBIL Score, then the probability of getting an education loan is higher.
CIBIL stands for Credit Information Bureau (India) Ltd. It is an agency that provides credit scores as well as records to the lender, thereby allowing the lender to assess the borrower, whether he/she would be able to repay the loan or not.
CIBIL records all your information including credit card payments, EMIs, outstanding balances and all other information regarding credit profile. On the basis of all the information gathered, the credit score is calculated and it ranges from 300-900. A high score indicates that you can easily avail the loan, whereas a low score means your chances of getting a loan are low.
There are around 258 different variables each having some weightage, on the basis of which CIBIL credit score is calculated. The data for evaluation will be taken from the CIR (Credit Information Report) and six month’s historical financial data of the borrower.
The factors which affect the CIBIL Score are:
If you have a higher CIBIL Credit score then there will be so many benefits associated with it like:
Thus, the CIBIL credit score is highly beneficial when it comes to education loan approval. And if you repay your loan on time, then this will also help you in building a good credit score.
Students are more likely to have no credit history as they have just started. So, in that case, their parents will act as a guarantor and their credit history will be checked. On the basis of that, CIBIL credit score will be calculated and the student will be given the education loan. If the loan amount is less than INR 4 Lakhs, then the parent will act as a joint applicant and if a student is having a credit line and the loan amount is greater than INR 5 Lakhs, then a CIBIL score of 750 or above will be required.
An excellent CIBIL score is imperative if you are looking to get an education loan. In case you have a low CIBIL score, start working on improving it by taking proper measures.