• Education Loans

Impact of CIBIL on interest rates, disbursal TAT & Loan Amount

1030 Reads
3 min Read

By:CANAM Group
Updated On:Jan 08,2024 04:24 PM IST

Education Loan is one of the tools used by international students to fund their foreign education. The CIBIL score is one of the factors that affect education loans. Read this article to know how a high CIBIL score can get students a higher education loan with a lower interest rate and how students can improve their CIBIL score to get a study loan at an affordable rate.

impact of CIBIL score on interest rates.webp

Studying abroad requires a lot of money, and therefore, many students often take study loans to fund their education. Taking an education loan is not easy, as one must consider various factors like interest rate, loan amount, loan duration, etc. One of the biggest factors that affect a person's borrowing power is the CIBIL score.

Here’s a guide for aspiring students to understand the benefits of a high CIBIL score, how to improve CIBIL score, how banks determine interest rates, interest rates of different banks, how the CIBIL score impact interest rate, amount of loan and disbursal TAT.

Reasons to Study Abroad

In recent years more students than ever have gone to study abroad because of the benefits it gives. It is not difficult to understand why one should study in a foreign country at least once in their lifetime. Still, to answer the question of why to study abroad, here is a list of reasons to study abroad.

Reasons to study abroad	Description
Life Experience	For many international students, this could be one of the longest distances they would travel, and for many international students, it would be their first time. Students can take this opportunity with both hands and make the most of it by learning about culture and traditions, making new friends, learning new languages, and visiting the country's best locations.
More Career Opportunities	Students can find ample job opportunities in various fields after studying at a top university in a popular destination like the USA, UK or Canada. This is because they get to learn in-demand skills.
New Cultural Experience	While studying abroad, students will be able to experience the culture and traditions of that country. They will get the chance to explore fresh food and places. For example, students can go to the beaches while studying in Australia.
Personal Development	Studying in a foreign country makes students mature as they care for their food, clothes and many other things. They become more responsible as they have to live on their own. The new place might initially overwhelm them, but later, they get used to it.
World-Class Education	Studying in a foreign country like the USA, UK, Canada, and Australia allows students to study at top universities in the world. The faculties of these universities teach real-life skills to students and make them job-ready after graduation.

Benefits of a High CIBIL Score

CIBIL score is one of the factors that help lenders get an idea of a person’s creditworthiness based on their past credit behaviour. A good CIBIL score means a lower degree of risk for lenders. A high credit score gives the following benefits to the person:

benefits of cibil score.webp

How to improve your CIBIL score?

After knowing about the advantages of a high CIBIL score, our readers might also be thinking of increasing their CIBIL score. Firstly, it’s important that there is no technique by which one can increase their CIBIL score in a single day. There are various measures that one must follow regularly to increase one's CIBIL score. Some of the measures are given as below.

Have a mix bag of loans	If a borrower takes too many unsecured loans then the bank sees it as negative and may even decline the loans. Therefore, one must have both unsecured loans and secured loans.
Monitor CIBIL Score Regularly	All credit rating agencies provide annual free credit report by looking at which students can check for any errors. They will get to know if they have forgotten any loan payment. One can make sure that they have a good credit history.
Never withdraw cash with credit card	Many times students might think that withdrawing cash with credit card is same as debit card but it’s not true. Students might be charge a higher interest rate for the money withdrawn through credit card.
Timely Repayment	33% of the credit score comes from the payment history hence one must make the timely payments. One can also download apps that remind them of the payment. Another way to avoid delay payments are to set up automatic payments through which the payment will automatically be deducted from the account. In this method you just have to make sure that there is minimum balance.

How are interest rates determined by banks?

Banks can charge interest rate according to the guidelines of the Reserve Bank of India, the rate of interest charged by different loan providers vary depending on various factors. The factors which affect the interest rate of education loan are as follows:

CIBIL Score	CIBIL score is the primary factor considered when giving loans to borrowers. A high CIBIL score lets the borrower get an education loan at a lower interest rate.
Repayment Tenure	While it doesn’t apply to all the banks some loan providers may charge interest rates if it requires a long duration.
Relationship with the bank	Banks or financial institutions may offer lower interest rates for existing customers.
Type of Loan	The interest rate also varies according to the type of loan the borrower is availing. Further interest rates also vary whether the loan is secured or unsecured.

Interest Rates of Different Banks for Study Abroad Education Loan

There are various banks which provide education loans in India to study abroad at a nominal rate of interest. Below is a table which states three banks Yes Bank, HDFC Credila Bank and ICICI Bank with their interest rate, loan amount and repayment tenure. After comparing all three banks students can choose the bank which is most suitable for them.

Note: Canam doesn’t provide loans. It can only assist in getting an education loan at a lower interest rate.

Name of the Bank	Interest Rate Offered	Maximum Loan Amount	Repayment Tenure
ICICI Bank	9.50% to 14.75%	Rs. 2 Crore	• Up to 10/12 years for Under Graduate • Up to 12/14 years for Post Graduate
HDFC Credila Bank	13.80%	No Upper Limit	12 years
Axis Bank	• 15.20 Upto 4 Lakhs • 14.70 for loans between 4 lakhs and 7.5 lakhs • 13.70 for loans greater than 7.5 lakhs	No Upper Limit	15 years for unsecured loans

How does the CIBIL Score impact interest rate?

While taking an education loan students need to understand that they will have to pay it back to the bank with interest. The borrowed amount comprises two parts: the principal amount and the interest amount. The principal amount remains the same but the interest amount may vary depending on the CIBIL score. A cibil score shows the creditworthiness of the borrower. The Credit Information Bureau India Limited (CIBIL) score is a numerical representation of credit history and financial behavior of users.

CIBIL score is used by Lenders as a risk assessment tool. A higher score indicates responsible credit management and enhances the chances of students securing a loan or credit card at a lower interest rate. Conversely, a lower score may result in higher interest rates or even rejection of the application. Regularly monitoring and maintaining a healthy CIBIL score is crucial for securing better financial terms.

How does CIBIL Score impact the amount of loan?

A Credit Information Bureau (CIBIL) score is a crucial factor influencing the amount of loan students can secure. It is a numerical representation of the creditworthiness, ranging from 300 to 900. Lenders use this score to assess the risk associated with lending money to students.

A higher CIBIL score implies responsible financial behavior and increases the likelihood of loan approval. It signifies that borrowers have a history of timely repayments and a lower credit risk, making them a favorable candidate for lenders. Consequently, individuals with high CIBIL scores often qualify for larger loan amounts and enjoy more favorable interest rates. A high CIBIL score allows borrowers to get a larger loan amount because it shows that the borrower will be able to repay the amount loan on time.

On the contrary, a lower CIBIL score may hinder students loan prospects. Lenders may perceive them as a higher risk due to a history of missed payments or excessive debt. This could result in loan rejections or approvals for smaller amounts, accompanied by higher interest rates to compensate for the perceived risk.

What impact does CIBIL have on disbursal TAT?

It's not that the CIBIL score only impacts the interest rate of a loan but it also affects the turnaround time of a loan also known as TAT. Credit Score shows the creditworthiness of a borrower and it tells the bank how reliable the borrower is to lend the funds. Below are the factors which can impact the education loan approval process:

Speedy Approval	A high CIBIL score indicates the creditworthiness of the borrower, ensuring trust and speedy approval of loans.
Lower Interest Rates	Borrowers with high CIBIL scores can get loans at much lower interest rates.
Flexible Repayment Options	A good CIBIL score allows the borrower get flexible terms of repayment schedule and loan duration.
Repayment Ability Indicator	Banks use the CIBIL score to determine the repayment ability of the borrowers.

Conclusion

Education loan helps a student to study their dream program in a country like the USA, UK, Canada and Australia. An applicant needs to consider various factors before applying for a study loan like interest rate, loan amount, loan duration etc. One of the factors that can work in the favor of students is the CIBIL score. Students can use their or their parents' CIBIL score to get higher education loans with a lower interest rate. They can also contact canam experts to get student loans for abroad studies at affordable interest rates.

FAQ

How does my CIBIL score affect my loan interest?

An applicant with a high CIBIL score of 750 or above can get the education loan at a lower rate of interest.

Can I avail myself of a loan with a poor credit score?

A CIBIL score of 550 or lower is considered a bad credit score and makes it difficult for lenders to approve your loans.

What are the factors affecting interest rates in loans?

The factors affecting the interest rates for education loans for studying abroad are the academic record of a student, type of course, collateral provided and credit history of the borrower (CIBIL score).

How frequently does your CIBIL score get recalculated?

Credit bureaus use different factors like payment history, credit utilization, credit mix, and recent credit inquiries to calculate CIBIL scores.

What is the minimum credit score for a student loan?

A student loan usually requires a credit score of 670.

Get great articles direct to your inbox

The latest news, articles, and resources, sent straight to your inbox every month.

Popular Universities to Study Abroad

World class education waiting for you.

State University of New York College at Geneseo

New York, USA • 39 Programmes

Tuition Fee : USD 18000-19000 / year

New Brunswick Community College - Woodstock Campus

New Brunswick, Canada • 19 Programmes

Tuition Fee : CAD 10500-11000 / year

Memorial University of Newfoundland - St Johns Campus

Newfoundland and Labrador, Canada • 47 Programmes

Tuition Fee : CAD 20500-21000 / year

Navitas Group - Edith Cowan College - Joondalup Campus

Western Australia, Australia • 105 Programmes

Tuition Fee : AUD 30500-35000 / year

Western Institute of Technology at Taranaki (WITT)

New Plymouth, New Zealand • 15 Programmes

Tuition Fee : NZD 15000-21000 / year

Southern Cross University - Melbourne Campus

Victoria, Australia • 24 Programmes

Tuition Fee : AUD 32500-33000 / year

Northern Lights College - Dawson Creek Campus

British Columbia, Canada • 17 Programmes

Tuition Fee : CAD 8500-18500 / year

George Brown College - Casa Loma Campus

Ontario, Canada • 51 Programmes

Tuition Fee : CAD 17000-29000 / year

View All Universities

Latest at CANAM

Events, webinar, college / university visits and more.

University Visit - Univerity of Manitoba

Study in Canada

Chandigarh • 01:00PM

In-Person Event

University Visit - Bay Atlantic University

Study in USA • University Visit

kochi2 • 11:00AM

In-Person Event

University Visit - St. Francis Xavier University

Study in Canada • University Visit

Chandigarh • 11:00AM

In-Person Event

Top countries destinations

Popular university and colleges for Studying abroad.

Bond University Queensland
Central Queensland University - Rockhampton, North Campus Queensland
Charles Sturt University - Wagga Wagga Campus New South Wales
Deakin University - Geelong Waurn Ponds Campus Victoria
Engineering Institute of Technology - Perth campus Western Australia
Griffith University - Nathan Campus Queensland
La Trobe University - Bendigo Campus Victoria
LCI Melbourne - Art & Design School Victoria

Ara Institute of Canterbury - City Campus Southland
Aspire 2 International - Auckland Campus Auckland
Auckland University of Technology - City Campus Auckland
Eastern Institute of Technology - Hawke Bay Campus Hawke's Bay
Manukau Institute of Technology -Manukau Campus Auckland
Massey University - Auckland Campus Auckland
Nelson Marlborough Institute of Technology (NMIT) - Nelson Campus Southland
New Zealand Institute of Business & Technology (NZIBT) Auckland
The University of Waikato - Hamilton Campus Hamilton

Kent state university Ohio
San Jose State University California
Wright State University Ohio
Clark University Massachusetts
Rowan University New Jersey
Arkansas State University Arkansas
University of Wisconsin Milwaukee Wisconsin
Southern Illinois University Edwardsville Illinois
University of Findlay Ohio

Popular English Language Proficiency Exams

Blogs and Articles

Curated content to keep you updated on the latest education trends, news and more.

Medical Courses in UK

Medical courses in the UK are recognised globally for their academic challenge, updated facilities, and comprehensive practical experience. UK Univers...

Updated on • Dec 10,2024 05:36 PM IST • study in the UK

MBBS in Germany

Studying an MBBS in Germany offers a pathway to a world-class education in medicine, attracting thousands of aspiring doctors from around the globe ev...

Updated on • Dec 09,2024 05:49 PM IST • Study in Germany

Letter of Motivation for Germany

If you are planning to study abroad, you must know that the SOP is the most essential document for the application process. In Germany, the same SOP i...

Updated on • Dec 07,2024 05:11 PM IST • Germany

Part-Time Jobs in Germany for International Students

Studying abroad is an experience of a lifetime, incorporating distinct incidents and events. Students are advised to work part-time to make this adven...

Updated on • Dec 06,2024 04:38 PM IST • Study in Germany

Health Insurance in Germany for International Students

Do you know that Germany has one of the world's oldest national health insurance systems? That's right, and the health insurance system of Germany dat...

Updated on • Dec 06,2024 04:05 PM IST • Study in Germany

Scholarships in Germany for International Students

For international students looking to pursue their higher education abroad, Germany is known as one of the most affordable study destinations. Its cre...

Updated on • Dec 06,2024 03:59 PM IST • Study in Germany

Study Permit for Canada

Planning to study in Canada? But in order to heading off to the land of the maple leaf, it's important to understand how to apply for a Canadian study...

Updated on • Dec 05,2024 05:04 PM IST • Study in Canada

Student Life in UK

The United Kingdom is home to some of the most renowned universities that provide learning opportunities to students nationwide. The country is known ...

Updated on • Dec 04,2024 04:46 PM IST • study in the UK

Master of Information Systems (MIS) in USA

In today's fast-paced and digitally-driven world, organizations increasingly depend on information systems to streamline operations, enhance decision-...

Updated on • Dec 02,2024 05:28 PM IST • USA

Bachelor of Nursing Courses in Australia

Are you passionate about helping others and drawn to the dynamic world of healthcare? A Bachelor of Nursing in Australia could be the perfect la...

Updated on • Nov 30,2024 03:16 PM IST • Australia

Study Medicine in Germany

Are you an international student planning to study medicine in Germany? We want to tell you are going in the right direction, as Germany hosts world-c...

Updated on • Nov 27,2024 05:34 PM IST • Study in Germany

Universities of Applied Sciences in Germany

Germany is gaining popularity for its top-notch universities of applied science, known as Fachhochschule. These esteemed institutes offer top-quality ...

Updated on • Nov 27,2024 05:22 PM IST • Germany

Student Life in Germany

Germany is known for its affordable education and top-class universities in Europe, but what is it like to become a student at a German univ...

Updated on • Nov 27,2024 04:18 PM IST • Study in Germany

Complete Undergraduate Admissions Guide to Study in Germany

Ever dreamt of studying in a land steeped in history and innovation? Germany, a powerhouse of education and engineering, beckons you with it...

Updated on • Nov 27,2024 03:54 PM IST • Study in Germany

PTE Score Chart 2025: PTE Exam Scoring System & Calculation

Most international institutions demand proof of strong English skills, making language proficiency tests a necessity to pursue higher education. While...

Updated on • Nov 26,2024 01:55 PM IST • PTE

Masters in Project Management in USA

Students with ISTJ Personality may have a successful future in project management as their sole personality aligns with the needs of an exceptional pr...

Updated on • Nov 26,2024 01:15 PM IST • USA

IELTS Speaking Questions

The IELTS exam is a popular way for people who want to study overseas, but don't speak English as their first language or where it's not spoken often....

Updated on • Nov 25,2024 03:45 PM IST • IELTS

Accounting Courses in USA

The United States has always been a land of opportunities, especially in education. The allure of studying accounting in the US remains strong, thanks...

Updated on • Nov 25,2024 03:33 PM IST • USA

IELTS Writing Task

IELTS Writing Task One of the most crucial aspects to scoring well on an exam is writing. The IELTS assesses both Academic and General Training in ...

Updated on • Nov 21,2024 05:46 PM IST • IELTS

Best Cities to Study in Canada

Canada is home to lakhs of international students, making it one of the most popular study abroad destination in the world. The country is celebrated ...

Updated on • Nov 21,2024 05:23 PM IST • Study in Canada

Impact of CIBIL on interest rates, disbursal TAT & Loan Amount

Table of Contents

Reasons to Study Abroad

Benefits of a High CIBIL Score

How to improve your CIBIL score?

How are interest rates determined by banks?

Interest Rates of Different Banks for Study Abroad Education Loan

How does the CIBIL Score impact interest rate?

How does CIBIL Score impact the amount of loan?

What impact does CIBIL have on disbursal TAT?

Conclusion

FAQ

Events, webinar, college / university visits and more.

Popular university and colleges for Studying abroad.

Bond University Queensland

Central Queensland University - Rockhampton, North Campus Queensland

Charles Sturt University - Wagga Wagga Campus New South Wales

Deakin University - Geelong Waurn Ponds Campus Victoria

Engineering Institute of Technology - Perth campus Western Australia

Griffith University - Nathan Campus Queensland

La Trobe University - Bendigo Campus Victoria

LCI Melbourne - Art & Design School Victoria

University Canada West British Columbia

University of Windsor Ontario

Dalhousie University Nova Scotia

Carleton University Ontario

Cape Breton University Nova Scotia

University of ottawa Ontario

University of saskatchewan Saskatchewan

University of regina Saskatchewan

University of guelph Ontario

Ara Institute of Canterbury - City Campus Southland

Aspire 2 International - Auckland Campus Auckland

Auckland University of Technology - City Campus Auckland

Eastern Institute of Technology - Hawke Bay Campus Hawke's Bay

Manukau Institute of Technology -Manukau Campus Auckland

Massey University - Auckland Campus Auckland

Nelson Marlborough Institute of Technology (NMIT) - Nelson Campus Southland

New Zealand Institute of Business & Technology (NZIBT) Auckland

The University of Waikato - Hamilton Campus Hamilton

University of Warwick England

De Montfort University England

University of West London England

University of Strathclyde Scotland

Aston University England

University of Bath England

University of Liverpool England

Durham University England

Newcastle University England

Kent state university Ohio

San Jose State University California

Wright State University Ohio

Clark University Massachusetts

Rowan University New Jersey

Arkansas State University Arkansas

University of Wisconsin Milwaukee Wisconsin

Southern Illinois University Edwardsville Illinois

University of Findlay Ohio

Popular English Language Proficiency Exams