A credit score is the single most important factor that influences personal loan approval and the terms of the loan you receive. Nearly 30% of borrowers in India faced loan or credit card rejection due to poor credit history or score. This is why it is important to know what credit score is needed for a personal loan to ensure your loan isn’t rejected.

A higher credit score improves your chances of approval and helps you get better interest rates and flexible repayment terms. In this blog, we will understand the minimum credit score for personal loans in India.

What is a Credit Score and Why Does it Matter?

A credit score is a three-digit number between 300 to 900 that tells a borrower’s creditworthiness using their past credit history. It helps banks and Non-Banking Financial Companies (NBFCs) to assess applicants’ creditworthiness and the probability of getting back the loan amount on time.

There are 4 credit bureaus in India, consisting of TransUnion CIBIL, Experian, Equifax and CRIF High Mark that offer credit scores. Here is why credit scores matter:

• Borrowers with higher credit scores are approved for loans faster.
• A higher credit score signals lower credit risk, which enables lenders (banks and NBFCs) to offer competitive terms.

What Credit Score is Needed for a Personal Loan

The minimum credit score for personal loan application in India ranges from lender (Banks and NBFCs) to lender. A credit score of 700, however, is considered a good score. A score less than 700, on the other hand, can result in a personal loan rejection or being offered loans at high rates.

• Lenders pull CIBIL scores at the initial stage.
• Salaried applicants need to show a stable income with their credit score.
• Self-employed individuals have an irregular income, but higher credit scores help show creditworthiness.

CIBIL Score Range	Creditworthiness
750-900	Excellent
701-749	Good
650-699	Fair
600-649	Low
Below 599	Poor

Factors Contributing to Your Credit Score for Loans

Here are the factors that affect your credit score:

• Payment history (35% weight): Paying your loan EMIs and credit card bills is the most effective factor for your credit score.
• Credit utilisation (30%): It affects your credit score when you use over 30% of your credit limit, as high utilisation is a sign of financial strain.
• Length of Credit History (15%): An established and longer credit history shows a consistent history of how you have managed your debts.
• New inquiries (10%): Your credit report is subject to a hard inquiry every time you apply for a personal loan or credit card. Frequent inquiries show a higher credit risk.
• Credit mix (10%): A good mix of unsecured loans (credit cards or personal loans) and secured loans (home or auto loans) demonstrates your ability to handle different types of credit responsibly.

Personal Loan Eligibility Criteria

For personal loans DMI Finance has a simple eligibility criteria to ensure that our personal loans are easily accessible and qualifyable. The credit score required for personal loans by DMI Finance is set at 700. Here is the eligibility criteria you must meet in order to qualify for a personal loan:

• Age: 23 – 52 years
• Minimum Monthly Income: ₹25,000 or above
• Employment Type: Salaried & Self-Employed
• Minimum Credit Score: 700 or higher

How to Apply for a Personal Loan with DMI Finance

Here’s the step-by-step application process:

1. Download the DMI Finance App or visit the website
2. Tap “Apply Personal Loan” and enter your details
3. Upload documents via a secure digital interface
4. Choose the loan amount and preferred tenure
5. Complete e-KYC with Aadhaar
6. Approve e-mandate and submit.

Get approval and receive funds directly into your bank (within 24–72 hours).

How to Improve Your Credit Score

Here are the tips you can follow to improve your credit score:

• Always Pay Your Bills on Time: 35% of your credit score is based on timely payments. This is why you must always pay your personal loan EMIs and credit card bills on time, as it improves your credit score.
• Maintain Debt-to-Income Ratio Below 30%: Your credit utilisation percentage should never exceed 30% of your total credit limit. Keeping it below 30% demonstrates that you can handle credit responsibly.
• Limit the Number of Applications: Avoid applying for multiple credit cards and personal loans within a short period of time.
• Maintain a Healthy Credit Mix: Having a healthy credit mix allows you to improve your credit score, as it shows how you handle different types of credit responsibly.

Maintaining a strong credit score is an effective way to get a personal loan with an affordable rate and favourable terms. It not only helps you improve the chances of approval but also reduces the cost of borrowing. This is why you must always maintain a credit score above 700+.

DMI Finance personal loans offer you access to seamless funds with interest rates starting at 14.25%. We follow a completely digital process that ensures faster approval. Apply for a personal loan now to get funds for all your financial needs.

Frequently Asked Questions (FAQs)

1. What credit score is ideal for a personal loan in India?

For personal loans, a score of 750 is usually considered excellent. DMI Finance, however, processes personal loans with a 700+ credit score to make financial services accessible.

2. Can I get a personal loan with a 650 credit score?

You might or might not get approved for a personal loan with a 650 credit score. Even if you are approved for a personal loan, the chances are that you will have higher interest rates.

3. How frequently should I check my credit score?

Check your score at least once every 3 months to track changes and spot errors. The Reserve Bank of India (RBI) has mandated the credit bureaus to update the credit score twice a month, which means you can check your credit score twice a month for the latest updates.

4. How do new personal loans affect my credit score?

Every new personal loan application is considered a “hard inquiry,” which can temporarily reduce your score.

5. Does income affect loan approval even with a high credit score?

Yes, lenders consider your monthly income and debt-to-income ratio along with your credit score. A stable income of ₹25,000+ improves chances even if your score is moderate.

6. How long does it take for a credit score to reflect improvements?

It typically takes 3–6 months for timely payments and reduced credit utilisation to show in your report. Longer-term actions, like maintaining old accounts, may take 6–12 months to impact your score.

7. Can errors in my credit report lower my score?

Yes. Inaccurate loan records, duplicate entries, or wrongly reported defaults can reduce your score. Regularly reviewing your credit report and raising disputes with credit bureaus can quickly restore your score.

8. Are personal loans reported to credit bureaus?

Yes, all personal loans are reported to CIBIL, Experian, and other credit bureaus in India. Timely repayments improve your credit history, while missed payments can negatively impact your score for years.

9. Can a co-applicant improve my chances of personal loan approval?

Yes, having a co-applicant with a strong credit score or stable income increases approval chances. Lenders consider both applicants’ creditworthiness when deciding interest rates and loan amounts.

10. How does credit utilisation impact interest rates?

High credit utilisation signals higher risk and can lead to higher interest rates. Maintaining utilisation below 30% shows responsible credit behaviour, helping you qualify for lower rates and better loan terms.