More than CIBIL: What lenders really check before clearing your loan

A good CIBIL score helps, but lenders also weigh income stability, debt load, and spending discipline before approving your loan

When people think about loans, the first thing that comes to mind is their CIBIL score. While the three-digit number is important, it is rarely the only deciding factor. Lenders look at a much wider picture, income stability, existing debts, spending behaviour and overall financial discipline, before giving the nod.

Beyond the score: the debt-to-income ratio

A high CIBIL score doesn’t guarantee approval if your debt burden is already heavy.

 

Amit Bansal, founder of BharatLoan, said, “Even with a CIBIL score of 750 or above, if 50-60 per cent of income is already servicing debt, lenders see limited repayment capacity. For example, a salaried professional with a high score was recently declined because most of their salary was tied up in home and car loan EMIs.”

 

Sarika Shetty, co-founder and chief executive officer of RentenPe, shared her own experience. “In 2018, despite having a strong CIBIL and a stable income, my home loan application was rejected because lenders considered my high exposure to existing EMIs.”

Why income stability matters

Both Bansal and Shetty point out that lenders prefer predictable earnings. For salaried employees, tenure with

 

a reputed employer offers confidence. Gig workers and freelancers, however, face tougher scrutiny. Lenders examine tax returns, bank statements and proof of business continuity, sometimes discounting variable income such as incentives or freelance spikes.

 

Manish Goyal, chairman and managing director of Finkeda, explained, “Salaried employees can provide the lender with an assurance of income cash flows, which makes risk assessment easier. Self-employed borrowers cause lenders to think much more carefully about the stability of their earnings.”

 

Spending patterns under the lens

Your spending behaviour can also work for or against you. Bansal noted that frequent maxing out of credit cards or only paying minimum dues signals stress. Lenders assess this through credit reports and bank statements. Goyal added, “Excessive high-ticket credit card usage or ongoing discretionary expenditure can be valued more monetarily than simply paying EMIs on time.”

When a lower score still works

 

Experts agree that financial discipline can sometimes override the number. Shetty pointed out that collateral, regular savings and a low debt-to-income ratio can help. Bansal gave the example of a borrower with a CIBIL score of 660, who still secured a personal loan thanks to a consistent salaried job, zero existing debt and a long-standing relationship with the bank.

 

The bottom line

As Shetty summed up, “Lenders judge overall financial prudence over and above over-dependence upon scores.”

 

In short, your CIBIL score opens the door, but it is your income stability, debt levels and spending discipline that decide whether the loan goes through.