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All You Need to Know About CIBIL Score for Education Loan

All You Need to Know About CIBIL Score for Education Loan

With people aiming for financial independence and a better future, getting loans has become a simple process in India. And education loans are no different! While a wide range of finance options are readily available at your convenience, many lenders require you to present a good credit score to avail of it. Here’s why the CIBIL score for education loan is so important. 

What is the CIBIL score in education loans?

The Credit Bureau of India Limited is an organisation that keeps a record of all the financial transactions of individuals, such as loans and credit card payment history, EMI payments. The CIBIL score ranges from 300 to 900 and makes up for your entire credit history and thus helps lenders determine your repayment capacity.

Naturally, the score also affects the loan amount and the interest rate you’re eligible for. So, it is important to maintain a healthy credit score if you wish to apply for an education loan.

A high credit score of 750 and above is usually excellent and makes your education loan approval process easy.

Additional Read: What is a CIBIL Score? Why is it important while applying for a loan?

CIBIL score requirement for an education loan

So, you know that a good credit score is essential for the approval of a loan. But what if you have a low CIBIL score? Are you a student or a parent looking for a loan? Can you apply for a loan as a student with no credit history?

Consider these various scenarios to understand how CIBIL score works for education finance –

If you’re a student without any credit history, then you can apply for an education loan with a working parent as a joint applicant or a guarantor. In such a case, the lender will consider the credit report of your parents to determine their repayment capacity on your behalf.

If you’re a student with an existing credit line like a credit card, the lender will consider your credit history before approving your education loan. Then, it becomes important for you to maintain a good credit score. These days you can use an online tool to check your CIBIL score freeof cost.

Most lenders will accept a low credit score for your education loan application if you’re deemed reliable based on various other factors.

Does an education loan affect your CIBIL score?

Just like any other type of loan, an education loan also affects your credit score depending on your repayment behaviour. It is also reflected in your credit history. If you’re regular with your EMI payments and have a clean borrowing history, it will positively reflect in your credit report.

In contrast, repeated delays in EMI repayments can unfavourably affect your credit score. You can perform a CIBIL score check online to keep track.

Additional Read: Top 5 Myths About Cibil Score

Importance of CIBIL Scores for Education Loan

Education loans allow students to study in their desired country and institution, providing support for tuition, lodging, books, and more. CIBIL scores are central to determining whether an education loan is approved. A higher credit score can help you get approval, more favourable interest rates, better loan tenures, and more. 

How to Improve CIBIL Score to Obtain an Education Loan?

When applying for an education loan, a high CIBIL score can help your chances of approval, as well as provide more favourable loan terms. Some ways to improve your CIBIL score to obtain an education loan are:

  • Maintain a good credit utilisation ratio: This refers to the total percentage of credit you have used. It is essential to keep it between 30%-50%.
  • Repay all debts: Making timely repayments on loans, bills, and other bowstrings can help improve tour credit score. 
  • Time your loan applications: Getting rejected for a loan can cause your CIBIL score to drop. Do not immediately apply for another loan right after being rejected. 

Over to you

Want to apply for a loan for your higher education but are not sure if you have the perfect credit score? You can perform an online CIBIL score check free with Tata Capital. Visit our website to check your credit score and get started with your loan process.

You can also apply for a quick education loan with us at competitive interest rates. To know more, contact us today! For more information, head to the Tata Capital website or download the app today! 

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FAQs

Can I Get An Education Loan Without Having a Credit Score?

You can get an education loan even without a credit score. For this, you will have to apply for a co-applicant with a good CIBIL score.

What Is a Good CIBIL Score For an Education Loan?

Most financial institutions require a CIBIL score of 700 or more for education loans and others. However, some institutions offer loans for lower credit scores.

Does My Education Loan Affect My CIBIL Score?

Education loans do affect your CIBIL score. They are a form of credit, so if proper repayment management improves CIBIL scores.

How to check the CIBIL score for an education loan?

To check your CIBIL score, you can register on CIBIL’s official website. You can also check it using Tata Capital’s credit score checker.

What is the low CIBIL score for student loan?

The minimum credit score for an education loan is usually 685. However, some financial institutions may offer loans at lower scores.

Is 650 a good CIBIL score for education loan?

In general, financial institutions prefer CIBIL scores of 685 and above. However, some may offer education loans to those with lower credit scores as well.
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