Are you staring at a CIBIL score of 650 and wondering if you can still get a personal loan? You’re not alone. A score of 650 is considered average, and while it’s not perfect, it doesn’t close the door on your financial goals.
Whether it’s funding a medical emergency, planning a wedding, or consolidating debt, a personal loan can be a lifeline. In this guide, I’ll walk you through everything you need to know about securing a personal loan with a CIBIL score of 650 or above, share practical tips to boost your approval chances, and help you navigate the lending landscape with confidence.
Understanding Your CIBIL Score of 650
Your CIBIL score, provided by TransUnion CIBIL, is a three-digit number between 300 and 900 that reflects your creditworthiness. A score of 650 falls in the “average” range, signaling to lenders that you’re a moderate-risk borrower.
This score is calculated based on factors like repayment history, credit utilization, length of credit history, credit mix, and recent inquiries. While it’s not in the “excellent” category (750+), it’s still possible to secure a personal loan with strategic planning.
Lenders like HDFC Bank and Bajaj Finance often consider applicants with a CIBIL score of 650 or higher, though terms may be stricter than for those with higher scores. The key is understanding what lenders look for and how to position yourself as a reliable borrower.
Can You Get a Personal Loan with a 650 CIBIL Score?
Yes, you can! A CIBIL score of 650 is sufficient to qualify for a personal loan from many banks and Non-Banking Financial Companies (NBFCs) in India, such as Shriram Finance and IDFC FIRST Bank. However, you might face higher interest rates or lower loan amounts compared to someone with a score above 750. Lenders perceive a 650 score as moderate risk, so they may impose stricter eligibility criteria or require additional documentation to ensure repayment capacity.
For instance, My Mudra highlights that a stable income and responsible financial habits can significantly improve your approval odds, even with a 650 score. Here’s how you can make it work.
Tips to Secure a Personal Loan with a 650 CIBIL Score
To maximize your chances of approval and secure favorable terms, follow these actionable strategies:
- Showcase Stable Income: Lenders prioritize repayment capacity. Provide proof of a steady income, such as salary slips or Income Tax Returns (ITRs), to demonstrate financial stability. For salaried individuals, a minimum monthly income of ₹25,000 is often required, while self-employed applicants may need to show consistent business income.
- Apply for a Smaller Loan Amount: Requesting a modest loan reduces the lender’s risk, increasing approval chances. For example, instead of aiming for ₹5 lakhs, consider applying for ₹2-3 lakhs, as suggested by DBS Bank.
- Add a Co-Applicant or Guarantor: Partnering with someone who has a higher CIBIL score can boost your application’s credibility. This approach reassures lenders, as noted by IDFC FIRST Bank.
- Keep Credit Utilization Low: Aim to use less than 30% of your available credit limit. High credit utilization can signal financial strain, negatively impacting your score and approval odds.
- Avoid Multiple Loan Applications: Each application triggers a hard inquiry, which can lower your score. Research lenders like Axis Bank that cater to moderate credit scores and apply selectively.
- Check Your Credit Report for Errors: Regularly review your credit report from bureaus like CIBIL or CRIF High Mark to correct inaccuracies that might drag your score down.
Key Factors Lenders Consider Beyond CIBIL Score
While your CIBIL score is critical, lenders evaluate other aspects to assess your creditworthiness:
| Factor | Why It Matters |
|---|---|
| Repayment History | Consistent, timely payments on past loans and credit cards signal reliability. |
| Debt-to-Income Ratio | A lower ratio shows you can manage additional debt without financial strain. |
| Employment Stability | Steady employment or business income reassures lenders of your repayment capacity. |
| Credit Mix | A balanced mix of secured (e.g., home loans) and unsecured (e.g., personal loans) credit reflects financial discipline. |
| Loan Amount and Tenure | Smaller loans with shorter tenures are less risky for lenders. |
By addressing these factors, you can strengthen your application, even with a 650 CIBIL score.
Challenges of a 650 CIBIL Score and How to Overcome Them
A 650 CIBIL score comes with challenges, but they’re not insurmountable:
- Higher Interest Rates: Lenders may charge 5-10% higher rates compared to borrowers with scores above 750, as per My Mudra. To counter this, compare offers from multiple lenders to find the best deal.
- Limited Loan Amounts: You may qualify for smaller loans, such as ₹3 lakhs instead of ₹5 lakhs. Plan your finances accordingly to avoid overborrowing.
- Stricter Terms: Some lenders may require collateral or impose shorter repayment tenures. Opt for secured loans if unsecured options are too restrictive.
- Rejection Risk: Some traditional banks may reject your application outright. Explore NBFCs or fintech platforms like IndiaLends, which are more flexible with moderate scores.
How to Improve Your CIBIL Score for Better Loan Terms
Improving your CIBIL score can unlock better loan terms in the future. Here are quick tips to boost your score:
- Pay EMIs and Bills on Time: Timely payments contribute 35% to your score, per Bajaj Finance.
- Reduce Credit Utilization: Keep your credit card usage below 30% of the limit.
- Maintain Old Credit Accounts: Longer credit history improves your score, as noted by CreditMantri.
- Limit New Credit Applications: Avoid frequent loan or credit card applications to minimize hard inquiries.
- Monitor Your Credit Report: Regular checks help you spot and fix errors promptly.
Choosing the Right Lender for a 650 CIBIL Score
Not all lenders have the same criteria. Here’s a quick comparison of some options:
| Lender | Key Features |
|---|---|
| HDFC Bank | Offers loans up to ₹40 lakhs with competitive rates for 650+ scores. |
| Bajaj Finance | Flexible terms, requires 685+ score, quick online approval. |
| Shriram Finance | Caters to 600-700 scores, ideal for diverse credit backgrounds. |
| IDFC FIRST Bank | Considers co-applicants, offers solutions for low scores. |
| Axis Bank | Fast approval, competitive rates for moderate scores with stable income. |
Research lenders thoroughly and use their EMI calculators to plan repayments. Websites like Bank of India also provide detailed eligibility criteria to guide your application.
Final Thoughts
Securing a personal loan with a CIBIL score of 650 is entirely possible with the right approach. By showcasing stable income, applying for smaller loans, and choosing flexible lenders, you can access the funds you need.
Plus, taking steps to improve your credit score will open doors to better terms in the future. Stay proactive, compare options, and make informed financial decisions to achieve your goals.