How does the Co-Applicant’s CIBIL Score Impact your Loan Application?
Applying for loan with a co applicant has a lot of benefits. If your co-applicant has a steady income and a high CIBIL score, you can qualify for a bigger loan amount and more attractive personal loan interest rates. How do CIBIL scores work? The CIBIL Score plays a critical role in the loan application process. After an applicant fills out the application form and hands it over to the lender, the lender first checks the CIBIL Score and Report of the applicant. If the CIBIL Score is low, the lender may not even consider the application further and reject it at that point. If the CIBIL Score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy. The higher your score, the more your chances of securing a loan at favourable terms. How to select a co-applicant? Usually the spouse, parents, siblings or other family members are preferred choices for co-applicants. It is preferable to chose a applicant with good and substantial monthly income as the combined income is taken into consideration. This also works well with the CIBIL score point too as it will increase the chances for loan eligibility. If the co-applicant defaults on their share of the EMI payment, it will adversely affect future loan approval chances. Benefits and impact of your co-applicant’s CIBIL score Joint loan increases your eligibility it also distributes the liability of payment and impacts the credit history and credit score of both the borrowers. Therefore, it is vital for both the parties to understand their responsibilities towards the loan and its impact on their finances. If your co-applicant has a good CIBIL credit score, your loan application is more likely to get faster approval along with a lower rate of interest. From the lender’s perspective, a high CIBIL score translates into good repayment capacity. Co-applicant's Cibil Score is also checked by lenders before deciding on the loan application. If a co-applicant's score is low, it may negatively impact the loan application. Both the borrowers' credit history and score is impacted by a joint loan Do not default on monthly instalments Ensure that both applicant and co applicant have the most updated copies of these Know Your Customer (KYC) documents ready. Kindly keep in mind that if the responsible party does not pay on time or does not pay at all, this credit behaviour is reflected on the other party's credit report as well.