Why Your CIBIL Score Matters: The Key to Better Loan Approvals

When I was fresh out of college and landed my first job, I thought the toughest part was over. But then came my first attempt at taking a personal loan. To my surprise, the bank said no - I had no idea what a CIBIL score was, let alone that I had none. Turns out, it wasn’t about how much I earned, but how well I had managed credit – or in my case, how little experience I had with it.

If you’ve ever faced a similar surprise, you’re not alone. Your CIBIL score plays a far bigger role in your financial life than most of us realize. Whether you're applying for a home loan, a credit card, or even a loan against your mutual funds, your score can make or break that approval.

What is a CIBIL Score, and Why Should You Care?

Simply put, your CIBIL score is a three-digit number between 300 and 900 that reflects your creditworthiness. It’s calculated by TransUnion CIBIL, one of India’s top credit bureaus, based on your credit history – how timely you’ve paid EMIs, how much credit you’ve used, and whether you've defaulted in the past.

Most banks and lenders in India view this score as the first checkpoint. A high score (750 and above) means you're considered a safe borrower, and can help you get faster approvals and better interest rates. A low score, on the other hand, raises red flags. Think of it as your financial track record. Just like an interviewer checks your resume before hiring you, lenders check your CIBIL score before offering a loan.

How Does It Impact Loan Approvals in India?

Your CIBIL score is often the gateway to getting your loan application considered seriously. In India, whether it’s for a credit card, personal loan, home loan, or a secured loan like a loan against mutual funds, lenders pull up your score before anything else. A high score can simplify the process. You're likely to get pre-approved offers, quicker disbursals, and even better interest rates. But if your score is low, things get complicated. The lender may ask for more paperwork, reduce your sanctioned amount, or simply reject the application.

Let’s say Rahul, a salaried professional in Mumbai, applies for a loan of ₹5 lakhs. Despite a monthly income of ₹75,000, his low credit score of 630 leads the bank to offer only ₹2.5 lakhs, and that too at a higher interest rate. Meanwhile, his colleague Aarti, with a score of 785, gets the same amount approved within a day – and at 2% lower interest.

That’s the power your credit score can have in shaping your loan journey.

What Brings Down (or Improves) Your CIBIL Score?

There are a few behaviours that typically pull your score down. Late EMI payments or skipping credit card bills even once can have a lasting impact. Using up too much of your available credit limit is another common mistake. On the other hand, you build your score by paying bills on time, maintaining a good mix of credit (like both secured and unsecured loans), and keeping your credit utilization under 30 - 40%.

It's also smart to not apply for multiple loans or cards in a short span – too many "hard inquiries" can be a red flag. And remember: credit history matters. The longer your track record of responsible credit use, the better.

Can You Improve Your Score? Absolutely. Here’s How.

Improving your CIBIL score isn’t rocket science. It takes a few simple, disciplined habits over time. Start by paying all your EMIs and card dues on or before the due date. Set up automatic payments if you tend to forget. If you're carrying a high credit card balance, consider paying it down as soon as you can.

Avoid closing old cards, especially those with a long and clean history. They help maintain a healthy average credit age. Lastly, check your credit report regularly. Mistakes happen. If you find an error, raise a dispute with CIBIL. Fixing a wrongly reported default could significantly boost your score.

At Quicklend, We Look Beyond Just Your CIBIL Score

We understand that your financial story is more than just a number. While your CIBIL score does help us assess your credit behaviour, it isn’t the only thing we rely on. With Quicklend, you can get a loan against your mutual funds without having to sell your investments.

We offer a flexible credit line, interest-only EMIs, and absolutely no foreclosure charges. And yes, approvals happen fast – sometimes within just a few hours. So even if you’re still building or recovering your score, you could still be eligible for a credit line. We evaluate your complete financial profile.

Conclusion

Your CIBIL score is a reflection of how you manage credit. It doesn’t define your worth, but it does affect how easily you can access funds when you need them. The good news? It's never too late to work on it. Whether you're saving up for your child’s education, renovating your home, or facing an unexpected expense – keeping your credit score healthy will make your journey smoother.

And if you're looking for a way to raise funds without liquidating your investments, Quicklend is here to help.

 This article is for general guidance only. For personalised financial advice, please reach out to our team at Quicklend.