The phrases “CIBIL Score” and “credit score” are certainly familiar to you. Your creditworthiness is expressed numerically by your credit score.
This score, which has three digits and runs from 300 to 900, tells banks and other lending organizations if you can afford to pay back the money you borrow.
In this blog, we will discuss credit requirements for abroad education loans and how to build credit if you don’t have any.
Minimum credit score for an education loan
The needed credit score for an education loan is 685. Even yet, if it’s not too bad and it relates to a credit card, government banks may occasionally accept a credit score of less than 685.
The bulk of NBFCs present in India, however, always demand that co-applicants and loan applicants have credit scores of at least 700.
Should you get your child a credit card for college?
Why credit score is important for an education loan?
When deciding whether to study abroad or even in one’s nation, student loans are one of the most crucial considerations. Education loans can be your lifeline and support you at every level of your financial need as the expense of higher education rises.
To obtain a loan, you must meet several standards. The most crucial one is your credit score; in other words, a credit score and an education loan are related, and it is reasonable to assume that your credit score affects how much money you may borrow for college.
One of the most important considerations for an education loan is the applicant’s and co-credit applicant’s history. The credit score may often range from 300 to 900.
Although a minimum credit score of 750 or more is required for educational purposes since it is seen to be best for earning a higher degree, loan acceptance would be challenging for candidates with credit scores below 600.
When applying for an education loan, a student’s credit score may be crucial, but if they lack one, the lender will base their loan conditions on the credit ratings of their co-borrowers.
A student’s probability of getting financial aid can be boosted by meeting the lender’s other qualifying conditions and having a good credit score.
Credit score impact on education loans?
How to build your credit score?
The following are possible causes of your low credit score as well as suggestions for how to raise it:
Overuse of credit limit: Using your whole credit limit is a sign that you lack self-control when it comes to spending. Try to keep your balance between 30 and 50 percent of your total credit limit. You’ll use credit less as a result, improving your credit score.
Late and failed payments: Your credit score declines if you often skip or postpone loans or credit installments. Set up reminders to pay back all borrowed money on time; this will help you build credit and get better loan conditions in the future.
Rejected loan requests: Wait before applying for a new loan if your previous one was rejected. When your credit score declines with each loan denial, there will be a higher chance of a fresh loan denial in such situations. Improve your credit score as a top priority to be eligible for loans. You can then file a loan application with better conditions after doing this.
Documents required for education loan
Following is the list of documents required for an abroad education loan:
1. For Student-applicants
- Evidence of identity: PAN and Aadhar card.
- Evidence of address or residence: A current copy of a utility bill or phone bill Passport.
- Academic history: The tenth and twelfth results.
- Graduation result: Semester-wise.
- Results of the entrance exam via which admission was obtained (GMAT, GRE, TOEFL, or IELTS).
- Offer letter from the university you have applied to.
- Conditional admission letters are frequently taken into consideration.
- Declaration of study cost or schedule of costs.
- 2 photos.
- If there have been any prior loans from other banks or lenders, the most recent 1-year account statement.
2. For Co-applicants
- PAN, a passport, a driver’s license, or a voter ID card are all acceptable forms of identification.
- Evidence of address or residence: 2 passport-size photos and a recent copy of a phone bill, electricity bill, or Aadhar card.
- If there have been any prior loans from other banks or lenders, the most recent 1-year account statement.
Things to keep in mind before applying for a student loan
When you apply for a student loan to pay for your study abroad adventure, the following tips will help you:
- When requesting a student loan, it is crucial to follow the right guidelines and fully understand the university courses.
- Monitor your CIBIL score and its report before borrowing money from a bank or other financial institution.
- Constantly keep an eye on the loan amount and the conditions attached to it.
- Always give interest rates and moratoria significant thought.
