CIBIL Scores for Education Loan: Know Everything

Table of Content

1. What is the CIBIL Score?
2. Why is CIBIL Score Important for Education Loans?
3. Minimum CIBIL Score for Education Loans
4. How Does CIBIL Score Impact Education Loans?
5. Does Education Loan Debt Affect Your CIBIL Score?
6. CIBIL Score of the Parents vs. Education Loans
7. How to Improve Low CIBIL Scores?
8. Tips to Get an Education Loan with Low CIBIL Scores
9. Frequently Asked Questions

Exploring the global stage for education is inspiring. However, the rising cost of study often poses a challenge to many. When global dreams lack financial support, education loans help you overcome the barrier. For education loans to study abroad, which is a significant financial transaction, the CIBIL scores play an important role in the acceptance or rejection of applications.

What is the CIBIL Score?

In banking, CIBIL scores assess an individual’s creditworthiness. By definition, CIBIL (Credit Information Bureau (India) Limited) Scores are numerical summaries of an individual’s credit history, reflecting their creditworthiness. The scores are given on a scale of 300 – 900. 

Components of CIBIL Scores

• Credit history: Record of past credit card bills and EMIs.
• Credit utilization: It is the ratio of the credit used to the total available credit.
• Credit history duration: The time length of credit account activation.
• Credit types: The types of credit history, such as a home loan, credit card, etc. 

Why is CIBIL Score Important for Education Loans?

• Loan eligibility: CIBIL scores play a vital role in determining your education loan eligibility. The student or cosigner must have a minimum 700 CIBIL score to apply for an education loan to study abroad.

• Interest rates: A higher CIBIL score enhances your chances of a lower interest rate on education loans. Similarly, a low CIBIL score reduces your chances of a low-interest rate. 

• Future transactions and credit: Maintaining a high CIBIL score is helpful for higher credit limits and loan approval rates. Higher CIBIL scores enhance your creditworthiness. 

Minimum CIBIL Score for Education Loans

For education loans for domestic or international study, a minimum CIBIL score of 700 is recommended for cosigners. For students who are new to financial transactions, not having a CIBIL score is accepted by many lenders. 

How Does CIBIL Score Impact Education Loans?

CIBIL Score Range	Education Loan Availability
300 – 650	Poor CIBIL score. Difficult to get an education loan.
651 – 750	Eligible for an education loan.
750 – 900	Excellent CIBIL score. Easy to get an education loan.

Does Education Loan Debt Affect Your CIBIL Score?

Yes. When the repayment starts, your CIBIL scores increase or decrease based on your timely repayment. Pending education loan debt will affect your CIBIL scores and affect your future transactions. 

CIBIL Score of the Parents vs. Education Loans

CIBIL scores of your parent, who is likely to be the education loan cosigner, impact your education loan acceptance. They might already have a credit history involving credit cards, loans, and other transactions. If there are pending EMIs or credit bills, the CIBIL scores will not guarantee your education loan. 

As a student, it is understandable if you don’t have a financial history. But, when you apply for an education loan where the CIBIL scores are important, ensure your parent (who will be the cosigner) has a minimum CIBIL score of 700. 

How to Improve Low CIBIL Scores?

Obtaining an education loan is challenging with a low CIBIL score. However, there are ways to improve your scores: 

Limited credit card use: Don’t overuse your credit card. Keep the credit card usage to 30% – 50% to maintain a steady good CIBIL score. 

Effective management of your repayment: Have a proper repayment plan for your existing loans. Pending EMIs reduce your CIBIL scores and affect your education loan application.  

Don’t reapply soon if a loan is rejected: Every loan denial reduces your CIBIL scores. Don’t apply for an education loan soon after a loan application is rejected.

Tips to Get an Education Loan with Low CIBIL Scores

A low CIBIL score in education loan application can be managed if you keep these tips in mind:

• Pay your bills on time: Proper bill payments demonstrate your financial responsibility. 

• Consider secured education loan: Choose a secured loan by offering collateral, which can mitigate the influence of a low credit score on loan approval.

• Show proof of income: Provide documentation of a stable income to demonstrate your ability to repay the loan, even with a low credit score.

• Correct credit report errors: Regularly review your credit report and correct any errors to avoid negative impacts on your loan applications.

• Show academic merit: Demonstrating your academic merit and future earning potential paves way for negotiations with the lender. 

CIBIL scores can accelerate or break down your education loan process. Apply for an education loan to study abroad, choosing a cosigner with a good CIBIL score. 

Get complete abroad education loan guidance at zero cost. Connect with Nomad Credit and benefit from our personalized services. Our expert counselor will guide you based on your CIBIL scores and needs.

Frequently Asked Questions

How can I check my CIBIL scores for a foreign-education loan?

Go to the CIBIL website and register to check your CIBIL scores. More conveniently, UPI apps like Google Pay enable an easy way to check your CIBIL scores. 

Is 700 a good CIBIL score for abroad education loans? 

Yes. 700 is the minimum CIBIL score for education loans to study abroad.

Do international lenders check the student’s CIBIL scores for foreign-study loans? 

Yes. International lenders offer education loans without collateral or cosigner based on the student’s CIBIL scores. 

Do NBFCs check the student’s CIBIL scores?

Usually, NBFCs offer education loans to study abroad based on the CIBIL score of the parent (or cosigner, if both are different persons). 

Should both parents have a good CIBIL score for an education loan to study abroad?

No. The parent who acts as the cosigner in your study abroad education loan must have a good CIBIL score.