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I have a CIBIL score of 690 and I work as a mid-level sales executive with a top pharma company, having a CTC of 6.5 lakh per annum. I want to avail a personal loan of 3 lakh. I have credit cards from HDFC Bank and Axis Bank with regular payment history. But I have never availed any loans in the past. What are the chances of my loan approval?

-Name withheld on request

Your CIBIL score seems too low considering your regular repayment history. So, I would first suggest you to check your credit report and look out for any errors or wrong information that may be pulling down your credit score.

For most banks and major NBFCs, a CIBIL score of 690 would be on the lower side of their comfort level. Banks and large NBFCs usually prefer lending to individuals having a credit score of 750 and above. As personal loans are unsecured loans, lenders place higher emphasis on credit score while evaluating personal loan applicants than others. Although some NBFCs and fintech lenders approve personal loans to those having credit scores of less than 700, their interest rates are usually on the higher side.

Lenders also consider other factors during the evaluation process, including an applicant’s occupation profile, EMI/NMI ratio, employer’s profile and age. EMI/NMI ratio refers to the proportion of your net monthly income spent on servicing your EMI(s), including the EMI of your new loan. Thus, your occupation profile, employer’s profile and your zero EMI obligation may work in your favour.

I would also suggest you to check loan options against credit card offers, if any, available from your existing card issuer. Credit card loans are pre-approved loans offered to existing credit card holders having a good credit profile and clean repayment history. These loans have instant disbursal and are almost similar to personal loans in terms of product features.

Then, check with the bank(s), with whom you maintain savings account(s) or fixed deposits, on the availability of personal loans. Many banks offer loans at preferential interest rates to their existing account holders.

Finally, visit an online financial marketplace to compare personal loan offers available with other lenders. Such marketplaces allow you to compare loan offers from multiple lenders, including the smaller NBFC and fintech lenders, without adversely impacting your credit score.

Once you have all the options available, evaluate them and opt for the credit option and offer with lowest interest rate, for loan tenure and disbursal TAT that suits you.

Query answered by Naveen Kukreja, CEO& co-founder of Paisabazaar.com. Queries and views at mintmoney@livemint.com

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