CIBIL Score for Education Loan: Eligibility Criteria & How to Improve Your Score

A good CIBIL score for an education loan is extremely important. A good CIBIL score helps you to get your desired loan from whichever bank you want. But have you thought about how to maintain a proper CIBIL score? 

In this guide, you will learn the meaning of CIBIL score, why it is important, and what makes you eligible for a good CIBIL score. Read the guide to learn more!

CIBIL Score for Loan Eligibility

CIBIL score is a determining factor for your loan eligibility, primarily when you are looking for an education loan. The CIBIL score is a three-digit number that ranges from 300 to 900, and it reflects creditworthiness based on your credit history. 

This three-digit number, or the CIBIL score, is used by lenders to assess the risk of lending to you. 

CIBIL Score for Education Loan

CIBIL score for an education loan varies from one lender to another. Therefore, their approval also varies according to the loan provider, which you must check during applying. Unlike government-backed schemes, private lenders don’t approve a loan unless the CIBIL score is 700 and above. Hence, one must try to maintain the score. 

That said, in several cases the co-applicant’s education CIBIL score is also taken into consideration. If the CIBIL score of the co-applicant is strong, it increases the chances of approval and best interest rates deals. 

Eligibility Criteria for Education Loan

Here are the criteria that you must adhere to become eligible for an education loan in India:

• Nationality: You must be an Indian citizen to apply for an education loan.
• Admission: You must secure your admission to a recognized institution in India institution, or abroad. 
• Course: Your loan must be for a course that’s professional, technical, or academic. 
• Co-applicant: You will require a good co-applicant, especially if you don’t have a good credit history. 
• CIBIL Score: You must maintain a good education loan CIBIL Score to boost loan approval chances with your lenders. 

If you maintain all the above criteria, your chances of getting an education loan will increase, raising your chances of receiving a good education loan. 

How Much CIBIL Score is Required for an Education Loan?

Students and parents often have a common question,”Is CIBIL score required for an education?” The answer is— it depends on the type of lender and whether it's the student or the co-applicant is the primary borrower. 

Ideal CIBIL Score for Education Loans

Most banks and NBFCs prefer a CIBIL score of 700 and up during the time of evaluation of education loan applications, especially if it's unsecured. However, as several students don’t have a CIBIL score, they evaluate the score of their co-applicant, who’s usually their parent or guardian. 

Here’s a complete breakdown on how much cibil score is good for quick loan approval:

• 700 and above: A score above 700 is considered ideal. It has a higher chance of approval, with lower interest rates.
• 650–699: A score between 650 to 699 is acceptable for some lenders. However, the interest rates will be higher, or one would need to present collateral. 
• Below 650: A CIBIL score below 650 is considered risky, and you might need a guarantor or collateral to get the loan approved. However, even then, the loan amount wouldn’t be guaranteed.

Is a CIBIL Score Required for an Education Loan?

Yes, in most cases, a CIBIL score is required for education loan approval, especially from private banks and NBFCs. Even if the student doesn’t have a credit history, the co-applicant’s score becomes a deciding factor. Government banks may offer more flexibility under education loan schemes, but a good credit profile always improves your chances.

Maintaining a solid repayment history, paying EMIs on time, and reducing credit card debt can all help in building or improving a good CIBIL score before applying.

Education Loan with Low CIBIL Score

Wondering if you can apply with a minimum CIBIL score for an education loan? You are not the only one. Several students face similar challenges due to limited credit history. However, let us assure you that a low CIBIL score doesn’t disqualify you from securing a loan. How? Find Out!!

What You Should Know About Education Loan Approval

You must know that lenders usually assess the CIBIL score for loan eligibility to measure risk.  Therefore, while learning about abroad education loans, you must know that a high CIBIL score is important. However, it doesn’t mean that you cannot secure a loan with a low CIBIL score. 

Here are your options:

• Apply with a Co-applicant: Your co-borrower must have a good CIBIL score, and it will strengthen your application. 
• Offer Collateral: If you offer collateral like a property, FD or other assets, your education loan will become a secured one, making you eligible.
• Choose Government Banks: You can opt for a government bank’s loan scheme with flexible CIBIL score requirements. 
• Approach NBFCs or Fintech Lenders: Some Fintech and NBFCs might consider you, given that you will have a good chance of high income in the future. 

Some Tips & Tricks

If you demonstrate financial responsibility, like consistent income (for co-applicants), and timely bill payment, you can secure a loan even with a low CIBIL score. To understand whether you can utilize your low CIBIL score, you must find the right lender for you. 

Difference Between Credit Score and CIBIL Score

People often use the terms credit score and CIBIL score interchangeably, however, they are not the same. Here are the differences:

• A Credit Score is a more generalized term that represents your creditworthiness. 
• A CIBIL score is particularly generated by TransUnion CIBIL, one of the credit bureaus in India. Therefore, it is important for the Indian borrowers. 
• A credit score is like a category within which the CIBIL score is like a brand. 
• Other bureaus like Equifax, Experian, and CRIF High Mark also generate credit scores. 
• Lenders in India often refer to the CIBIL score by default due to its wide usage, but they may check other scores too.
• Lenders in India are more reliant on CIBIL scores due to their wide usage, but they also check other scores for eligibility. 

To sum it up, all CIBIL scores can be considered as credit scores, however, not all credit scores can be CIBIL scores. 

Improve CIBIL Score for Education Loan

A good credit profile is extremely important if you want your loan to be processed smoothly. Therefore, you must work on improving your CIBIL score for your preferred education loan. 

Lenders often consider higher CIBIL scores as more financially responsible and therefore provide better offers.

Tips to Improve Your CIBIL Score

Here are some straightforward steps you or your co-applicant can take to either build or repair your credit score:

• Pay your EMIs and credit card bills on time: If you have any pending EMIs, start repaying them on time to affect your credit score positively. 
• Keep a low credit utilization ratio: Always use 30% of your available credit limit, which makes you more financially responsible.
• Avoid applying for multiple loans at once: Do not apply for multiple loans at one time, too many inquiries may affect your credit score negatively.
• Regularly check your credit report: Check your credit limit from time to time to spot and fix errors or outdated information regarding your profile.
• Opened Older Credit Accounts: Keep your older credit accounts open, as it will influence your CIBIL score positively. 

These tips will gradually boost your CIBIL and help you qualify for your preferred education loan.

How to Increase Your CIBIL Score to 800?

800 is an achievable CIBIL score, however, you must consistently maintain some financial habits. 

This is how you can work towards that goal over time:

• Clear any existing dues: If you have any outstanding loans or credit card balances, pay them off and keep your financial burden off track.
• Use credit wisely: Use your credit card only when there’s an emergency, and do not max out your limit or keep low balances. 
• Diversify your credit mix: Keep a healthy mix of both secured and unsecured loans to demonstrate financial stability. 
• Steer clear of loan settlements: Avoid settling loans or defaulting on them as they damage your score. Instead, always aim to repay your amount in full.
• Be patient and consistent: Building a score of 800 takes time, but with discipline, it’s achievable.

Be patient; building a score of 800 is a time-consuming job. However, if you are disciplined, it is achievable. 

FAQ

• Which CIBIL Score is best for an education loan?

700 and up is the best CIBIL score if you want the best deals on your education loan. However, you can get an education loan on a lower CIBIL score if you present aollateral, or go for government-aided loans. 

• How can I get an education loan if my CIBIL is low?

If your CIBIL score for an education loan is low, then you can opt for a secured one. Moreover, you can also apply with a co-borrower with a high CIBIL score. That will help you secure an education loan for your abroad education. 

• How to increase my CIBIL Score?

Here is how you can increase your CIBIL score:

• Maintain a healthy credit score. 
• Don’t become a guarantor
• Avoid taking multiple loans
• Maintain credit card ratio 
• Repay your dues promptly 

• Can I delete my CIBIL history?

No, you cannot delete your CIBIL history. If you want, you can increase your CIBIL score by paying your dues on time and maintaining a healthy credit score. 

Parting Thoughts 

So here is the complete guide for CIBIL score for education loan. Take a good read and understand what you need to do if you want the best deals on your education loans. Understand what can increase your CIBIL score, learn the difference between Credit and CIBIL score, and know what you can do in case you have a low CIBIL score.