Credit Score

How Does the CIBIL Score Affect Your Personal Loan Interest Rates?

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23 Apr 2026 |5 Minutes
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Whether it is a public or private bank or NBFCs, no lender assigns interest rates randomly, especially when it comes to unsecured loans, like a Personal Loan. The CIBIL score is one of the first filters lenders use to assess how risky it is to lend to you. A higher score (750+) can open access to better interest rates; however, a lower score can increase your borrowing cost or limit your borrowing options altogether. 

However, most individuals don’t understand that it is never just about a credit score, but how strong your overall credit profile is. So, let’s understand interest rate changes according to the CIBIL score, and how you can improve it. 

The Link Between CIBIL Score and Interest Rates 

CIBIL Score PL

TransUnion CIBIL is one of India’s oldest and most trusted credit bureaus that prepares credit reports and assigns a three-digit number that ranges between 300 and 900, based on your credit behaviour. 
This CIBIL score helps lenders across India assess your repayment capability and classify your risk profile before offering any loan. Based on your CIBIL score, lenders place you into specific risk categories, which directly influence the interest rate offered.

Here’s a table that represents the different risk categories: 

CIBIL Score range

Risk category

750 and above

Excellent

700- 749

Good

650 - 699

Fair

600 - 649

Poor

300 - 599

Below Average

NA/NH

No credit history

A higher score signals lower risk, often resulting in better rates, while a lower score may lead to higher interest rates due to increased lending risk.

Read More: What are the factors that can impact your CIBIL score negatively?

How Do Personal Loan Interest Rates Change According to CIBIL Score?

Each lender has their unique risk-based pricing model to determine the Personal Loan interest rates. So, even a 10-20 points difference in your CIBIL score can significantly impact the interest rate. 
Here’s a table that shows how interest rates can change according to CIBIL score: 

CIBIL score range

Possible interest rate range

750 and above

10.5 - 12%

700- 749

12 - 15%

650 - 699

15 - 18%

Below 649

18 - 24% or higher

Note: The interest rates mentioned above are indicative and may vary across lenders, loan amount, tenure, and overall credit profile.

Lenders often start with a base cost of funding loans, which reflects what it costs the lender to secure the funds. On top of that, they add a risk premium to account for borrower-specific risks, like default probability. 

The risk premium exists because personal loans are unsecured loans, and they are not backed by any collateral. So, lenders reduce the risk by charging a higher premium to risky borrowers and a lower premium to reliable borrowers. 

Key Factors Determining Personal Loan Interest Rates

CIBIL score is generated by assessing a mix of factors, like payment history, credit utilisation ratio, credit mix, credit history length, and recent credit applications. However, that’s only one aspect of determining the interest rate. 

There are other factors that affect the interest rates on personal loans: 

Income 
Your income is another important factor in determining the interest rate for your Personal Loan application. The higher your income, the higher your chances of getting a low interest rate because lenders analyse how easily you can repay the loan. Lenders' trust increases when you have a stable and sufficient income, as it indicates higher loan repayment capacity. 

Organisation’s reputation 
Individuals working in a reputed company are more likely to receive a low interest rate on personal loans. Lenders associate well-established organisations with stable income, consistent salary payouts, and lower employment risk. So, such applicants are considered more reliable in terms of loan repayment. 

Loan repayment history 
Along with the CIBIL score, lenders check the loan repayment history because it reflects your actual behaviour with credit over time. If you have been consistent with your loan repayments or credit card bills, the lender is likely to charge a low interest rate on your personal loan. Most lenders prefer lending to customers who haven’t defaulted in the previous 12 months or have settled accounts. 

Banking relationships
Your history with a bank or a lender makes you a loyal customer. For example, if you have opened your bank account and a fixed account in the same bank, it builds familiarity and trust. They already have access to your financial behaviour, which reduces their risk and results in faster approvals and more favourable interest rates. 

Ways to Secure a Personal Loan at Better Rates with a Low CIBIL Score

You can always build and improve your credit score by demonstrating a healthy credit behaviour. However, it would take months to reflect that consistency in your CIBIL score. 
So, if you don’t have an excellent CIBIL score and are looking for a Personal Loan at favourable interest rates, here are some ways that you can try:

●    Try with a bank where you already have your savings account or salary account. 
●    Look for pre-approved loan offers, as banks do provide such offers to existing customers, sometimes at lower interest rates. 
●    Try applying with a co-applicant who has a stronger financial profile, as this helps balance the lender’s risk.
●    Apply for a lower loan amount because that also reduces the lender’s risk. 
●    Compare lenders before applying, as some may offer better rates even with lower scores. Don’t settle for the first offer. 

Read More: How to Get a 900 Credit Score – Tips to Improve CIBIL

To Conclude

The interest rate does change in accordance with CIBIL score; however, it is not the only factor that determines the approval. You need a strong credit profile that reflects stable income, manageable debt levels, and consistent repayment behaviour.

Lenders look at the complete picture before approving the loan. A good CIBIL score gives you an advantage; however, combining it with a healthy financial profile helps you secure the most favourable rates. 

Check your CIBIL score today with Poonawalla Fincorp to understand your eligibility and improve your chances of securing favourable loan terms.

FAQs

Do interest rates change according to CIBIL score? 
Yes, interest rates for unsecured loans, like a personal loan, do change on the basis of CIBIL score because it is one of the important factors to classify your risk profile and determine eligibility. A higher CIBIL score means lower interest rates, and vice versa. 

How long does it take to improve the CIBIL score? 
It takes around 4-12 months of consistent and good financial behaviour to see an improvement in CIBIL score from 650 - 700 to 750, and become eligible for loans with better interest rates. Recovering from serious credit issues or a low credit score may require 1-2 years of consistent good financial behaviour. 
Which one, banks or NBFCs, offer better Personal Loan interest rates? 
Public sector banks offer lower interest rates; however, they have stricter approval terms as compared to private banks and NBFCs. NBFCs provide personal loans at flexible loan terms. Even with a decent credit score, individuals can get a Personal Loan approved.  

Does a Personal Loan affect CIBIL score? 
Yes, applying for and taking a personal loan can affect the CIBIL score. At first, you will notice a sharp, however, temporary dip of 5-20 points. However, with consistent and timely EMI payment, the score will improve as you have a strong payment history. 

Does a 10-20 point difference in CIBIL score matter?
No, a 10-20 point difference in CIBIL doesn’t matter in improving the interest rates because lenders mostly look at the range, and not the exact number. The change definitely matters if it pushes you into the next bracket. For example, if your score moved from 742 to 755, this change can slightly improve your chances. 

Table of Content
  • The Link Between CIBIL Score and Interest Rates
  • How Do Personal Loan Interest Rates Change According to CIBIL Score?
  • Key Factors Determining Personal Loan Interest Rates
  • Ways to Secure a Personal Loan at Better Rates with a Low CIBIL Score
  • Conclusion
  • Frequently Asked Questions
Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.

*Terms and Conditions apply
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398var apiUrl = baseUrl1 + "/o/subscription/create-subscription-lead?RelatedProspectId=" + encodeURIComponent(prospectId.trim()) + 
399"&ActivityNote=" + encodeURIComponent(activitnn) + "&ActivityDateTime=" + encodeURIComponent(increaseTimeByFiveMinutes()) + 
400"&ActivityEvent=258"+"&ProcessFilesAsync=true"; 
401  
402    const myHeaders = new Headers(); 
403//myHeaders.append("Authorization", 'Bearer ' + _token); 
404myHeaders.append("Cookie", "COOKIE_SUPPORT=true; GUEST_LANGUAGE_ID=en_US; JSESSIONID=077E178F6946DD868149B7A58A993FBB"); 
405 
406const requestOptions = { 
407  method: "POST", 
408  headers: myHeaders, 
409  redirect: "follow" 
410}; 
411 
412fetch(apiUrl, requestOptions) 
413  .then((response) => response.text()) 
414  .then((data) => { 
415		$("#success_req").css("display","block"); 
416		$("#waitd,.waitd").css("display","none"); 
417					$("#emailID").val(""); 
418					setTimeout(()=>{ 
419					$("#success_req").css("display","none"); 
420					},2000); 
421	}) 
422	.catch((error)=>{ 
423	console.warn(error); 
424	}) 
425    
426
427	 
428	function sendSubcriptionAgain(EmailId) { 
429			var emailId=EmailId; 
430		$("#success_req").css("display","none"); 
431		$("#success_suscrib").css("display","none"); 
432	 
433		//const emailRegex = /^[a-zA-Z0-9._%+-]+@gmail\.com$/; 
434		const emailRegex = /^[a-zA-Z0-9._%+-]+@(gmail\.com|yahoo\.com|yopmail\.com|outlook\.com|[a-zA-Z0-9.-]+\.[a-zA-Z]{2,})$/; 
435   if(emailRegex.test(emailId)){ 
436		  emailInput.classList.remove('danger'); 
437		 $("#error_val").css("display","none"); 
438		 $("#error_req").css("display","none"); 
439	 }else{ 
440		 if(emailId ==""){	 
441			 emailInput.classList.add('danger'); 
442		  $("#error_val").css("display","none"); 
443			$("#error_req").css("display","block"); 
444			return; 
445	   }else{ 
446			 emailInput.classList.add('danger'); 
447			  $("#error_val").css("display","block"); 
448			  $("#error_req").css("display","none"); 
449			 return; 
450
451		   
452
453	//	return; 
454	 
455    return new Promise((resolve, reject) => { 
456        $.ajax({ 
457             url: baseUrl1+"/o/subscription/get-lead-by-email?email="+emailId, 
458            type: 'GET', 
459           //	headers: { 
460           // 'Authorization': 'Bearer ' + _token 
461           //  }, 
462            dataType: 'json', 
463            success: function (data) { 
464                resolve(data); 
465                if (data && data?.length > 0) { 
466                    //	$("#success_suscrib").css("display","block"); 
467                    passLeadGenerate(data[0].ProspectID, emailId); 
468                } else { 
469                    $("#success_suscrib").css("display", "none"); 
470                    newSuscribed(emailId); 
471
472								$("#waitd ,.waitd").css("display","none"); 
473                $.each(data, function (index, loan) { 
474                    $('#loanList').append($('<option></option>').attr('value', loan.lId).text(loan.loanName)); 
475                }); 
476            }, 
477 
478            complete: function () { 
479            }, 
480            error: function (xhr, status, error) { 
481                reject(new Error("Error fetching data:", error)) 
482 
483
484        }); 
485    })	 
486
487		 
488</script> 
489 
490 
491 
492<#assign baseUrl= themeDisplay.getPortalURL() > 
493<#assign currentPageUrl = themeDisplay.getPortalURL() + themeDisplay.getURLCurrent()> 
494<#assign articles = []>  
495 
496 
497 
498<script type="application/ld+json"> 
499
500          "@context": "https://schema.org/",  
501          "@type": "BreadcrumbList",  
502          "itemListElement": [{ 
503            "@type": "ListItem",  
504            "position": 1,  
505            "name": "Home", 
506            "item": "${baseUrl}"   
507          },{ 
508            "@type": "ListItem",  
509            "position": 2,  
510            "name": "Blogs", 
511            "item": "${baseUrl}/blogs/all-blogs"   
512          },{ 
513            "@type": "ListItem",  
514            "position": 3,  
515            "name": "${themeDisplay.getURLCurrent()?split('/')[2]?replace("-"," ")?capitalize}", 
516            "item": "${themeDisplay.getPortalURL()}/blogs/${themeDisplay.getURLCurrent()?split('/')[2]}"   
517          },{ 
518            "@type": "ListItem",  
519            "position": 4,  
520            "name": "${title}", 
521            "item": "${themeDisplay.getPortalURL()}${themeDisplay.getURLCurrent()}"   
522          }] 
523
524    </script>