Active Stocks
Wed Apr 24 2024 15:59:54
  1. Tata Steel share price
  2. 165.50 2.73%
  1. NTPC share price
  2. 351.25 1.25%
  1. Power Grid Corporation Of India share price
  2. 290.00 1.75%
  1. Infosys share price
  2. 1,431.85 -0.68%
  1. ITC share price
  2. 428.85 -0.08%
Business News/ Money / Personal Finance/  What are the specific CIBIL score requirements for business loans? MintGenie explains
BackBack

What are the specific CIBIL score requirements for business loans? MintGenie explains

Borrowers with excellent credit scores typically have a higher chance of loan approval and may qualify for lower interest rates and better loan terms.

Different lenders may have varying eligibility criteria and may place different levels of importance on credit scores.Premium
Different lenders may have varying eligibility criteria and may place different levels of importance on credit scores.

CIBIL score is an important factor that banks consider when evaluating applications for business loans. While there is not a fixed threshold of CIBIL score requirement which is applicable universally to all banks, a higher CIBIL score usually raises the likelihood of loan approval and favourable terms. Here are the general rules:

Excellent credit score (750 and above): Applicants with excellent credit scores typically have a higher chance of loan approval and may qualify for lower interest rates and better loan terms. Banks, therefore, consider them as low-risk borrowers.

Good credit score (700 - 749): A good credit score shows a solid credit history and responsible repayment behaviour. Borrowers who fall within this range may still qualify for business loans but might face slightly higher interest rates compared to those with excellent scores.

Fair credit score (650 - 699): Individuals with fair credit scores may face more stringent lending criteria and could encounter challenges in securing business loans. While some lenders may still consider their applications, they might face higher interest rates and stricter terms.

Poor credit score (Below 650): Applicants with poor credit scores may find it challenging to procure business loans from traditional lenders. They may need to explore alternative financing options or work on improving their creditworthiness before applying for a loan.

ALSO READ: What is the fastest way to improve your CIBIL score? Follow these 9 steps

It’s vital to note that apart from the CIBIL score, banks also consider other factors such as the applicant's revenue, profit, sector, current debt (if any) in order to make a guess of their ability to repay at the time of examining business loan applications. 

Besides, different lenders may have varying eligibility criteria and may place different levels of importance on credit scores. 

Therefore, it is advisable for individuals seeking business loans to research and compare lenders to find the best fit for their financial needs and credit profile.

Frequently Asked Questions

Do all banks have the same criteria of giving approvals for business loans?

Different lenders usually have varying eligibility criteria and may place different levels of importance on credit scores. 

At the time of giving business loans, do banks consider factors apart from the CIBIL score?

Besides the CIBIL score, banks consider a slew of factors such as the applicant’s revenue, profit, sector, current debt (if any) in order to make a guess of their ability to repay at the time of examining business loan applications. 

How do closing old credit accounts impact your credit score?

Closing old credit account impact your credit score based on an array of factors such as credit utilisation ratio, length of  credit history, payment history and credit mix

What is the credit utilisation ratio?

It is the amount of credit you're using compared to the total credit available to you. 

How does the age of a credit account impact credit score?

The age of your credit accounts is an important factor in determining your credit score. Closing old credit accounts can shorten your average account age, which may slightly lower your score.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 25 Mar 2024, 03:04 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App