Nowadays, students turn to education loans to finance their education independently, without depending on their parents or anyone else. The CIBIL score will play a crucial role in your life. So, what is the CIBIL score for an education loan, and how is it important for a student? Let’s find answers to these questions and explore other interesting information.
Key highlights:
- Education Loan and CIBIL Score
- Education Loan CIBIL Score and Its Impact:
- A Minimum CIBIL Score for an Education Loan
- FAQs
Education Loan and CIBIL Score
CIBIL stands for Credit Information Bureau India Limited, an agency that has access to your credit information. CIBIL is one of the many credit bureaus in India. CIBIL score is also known as credit score, which is a three-digit summary ranging from 300 to 850, and it is derived from data provided by lenders and compiled in the Credit Information Report (CIR). It’s essential to make timely repayments on any credit you have taken to enhance your credit score.
So, what is the role of a credit score in a student’s life? When you opt for an education loan, the credit score of your co-applicant will be evaluated. Also, as you progress in life, you will eventually require other financial solutions such as a home loan, car loan or credit card. By repaying your student loan, you will build a healthy credit score, which can unlock several benefits when you opt for other financial products.
Also Read: Understanding How Education Loan Works
Education Loan CIBIL Score and Its Impact:
| Score | Rating | |
|---|---|---|
| 800-850 | Excellent | An individual with these scores is considered financially responsible, ensuring timely payments of loans, credit card bills, rent, and more. |
| 740-799 | Very Good | |
| 670-739 | Good | Within this range, an individual may earn good deals on financial products but not as much as the ones with higher scores. |
| 580-669 | Fair | Scores in this range suggest minor credit issues but no major delinquencies. Lenders will offer their credit services, but they may not enjoy high-end facilities. |
| 300-579 | Poor | This is considered a bad credit score for student loans and indicates that individuals have multiple default payments for several credit products. They will have little or no chance of obtaining new credit/any form of loan in future. |
Students are first-time borrowers and usually have no credit score for student loans. So, there is also another category - ‘new to credit’. Individuals with minimum or no credit history fall into this category. Therefore, when you apply for student loans with no credit score, your financial lender will examine your student profile to determine your employability potential. Some parameters evaluated will include your academic scores, entrance exam scores, the pedigree of your university, and continuity in your education, to name a few.
A Minimum CIBIL Score for an Education Loan
So, what is the minimum CIBIL score required for an education loan? Is it 650, 700 or more? The minimum CIBIL score for an education loan will depend on your chosen financial institution’s preset criteria. Ideally, a CIBIL score required for an education loan should be more than 740. However, the minimum CIBIL required for an education loan can differ based on the lender.
So, now that you know the importance of credit score, you need to plan your student loan journey carefully and use online calculators such as the Education Loan EMI Calculator to calculate the EMI for an education loan.
At Avanse Financial Services, we offer an abroad education loan and a student loan to study in India with benefits such as 100% finance, quick loan sanctions and flexible repayment options. If you have any questions, please remember we are just a call away.
FAQs
1. Can you get an education loan with a low CIBIL score?
Please remember that getting an education loan with a low CIBIL score can be difficult.
2. Can you get an education loan without a CIBIL score?
Since a student loan is often the first form of credit in most students’ lives, a student loan without a CIBIL score can be offered based on the employability potential of the student and the financial background of the co-applicant. To increase the chances of getting a student loan without a credit score, you need to have a robust student profile.
3. Why is the CIBIL score for a student loan checked?
The credit score of your co-applicant is checked to evaluate their credit history and past financial records.
