Increase CIBIL Score: Getting a loan from a bank or financial institution in India has become easier than ever, but many people still face difficulties due to one reason: their CIBIL score. It’s generally believed that banks will immediately approve loans if they have a CIBIL score of 750 or higher. However, the reality is that sometimes loans are rejected even with a strong score. Why? Let’s understand this in detail.

What does a CIBIL score indicate?

The CIBIL score is a three-digit number ranging from 300 to 900. This score reflects the amount of credit a person has previously taken and how responsibly they have repaid it on time. Credit card usage, loan repayment history, and timely EMI payments all impact the score. 300 is considered the weakest, while 900 is considered the best. A good score can result in faster loan approval and lower interest rates.

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Can a loan get stuck even with a 750 score?

Many times, despite their best efforts, people are unable to understand why banks are refusing loans despite having a good score, like 750. The biggest reason for this is the debt-to-income ratio. Banks want to see how much of your monthly income is already going towards EMIs. If this ratio exceeds 40 percent, the bank considers you a risky customer and will not take the risk of granting a loan.

Why is the debt-to-income ratio important?

Let’s say you have a salary of ₹1 lakh per month and an EMI of ₹45,000. In this situation, your DTI will be 45 percent. Even if your CIBIL score is good, the bank will fear that you may find it difficult to handle the burden of additional EMIs. This is why your loan request may be rejected.

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Applying for loans repeatedly is also detrimental

Applying for loans or credit cards multiple times in a short period weakens your credit profile. Banks interpret this as a sign that you are under financial pressure. Similarly, frequent job changes are a risk factor for banks, reducing your chances of getting a loan.

How to Improve Your CIBIL Score

Improving your credit score isn’t difficult; it just requires a little discipline. Paying monthly EMIs on time, not using more than 30 percent of your credit card limit, maintaining a low DTI, maintaining a stable job, and not applying for loans too often—all of these habits can increase your chances of loan approval.