Home Business Finance How Does a Co-Applicant’s CIBIL Score Affect Your Personal Loan Application

How Does a Co-Applicant’s CIBIL Score Affect Your Personal Loan Application


Currently, there exists a plethora of loans in the market to meet every need of yours. Be it personal loans, home loans, auto loans, student loans, and so on. When you approach an institutional lender with a loan request, you must meet their personal loan application.

conditions and requirements, failing which you will not be granted your loan request. One such important factor that determines your eligibility for a loan is your CIBIL score. Thus, many loan seekers apply for a loan by onboarding a co-applicant – which is referred to as ‘joint finance’.

Who is a Co-Applicant

When you apply for an instant personal loan application, you can do so with a co-applicant. The most common instance of a co-applicant is your spouse. And in this case, before lending you the sum, the lender will consider both your income sources and repayment ability. The repayment tenure on such loans is gauged based on the age of the older of the two applicants. And each spouse can also avail of tax benefits on the same. Additionally, many banks and lending institutions also have provisions to allow other family members. Such as your parents and siblings, to be co-applicants. Before granting you the loan, the lender will ensure that both you and your co-applicant meet the personal loan eligibility requirements. A part of which will be checking your respective CIBIL scores. 

Advantages of a Co-Applicant

When you apply for an instant personal loan application with a co-applicant, you stand to benefit from the following advantages:

  • CIBIL Score Being Low: If your CIBIL score is low, chances are that your loan application will be rejected. However, having a co-applicant with a high CIBIL score will help you secure your loan.
  • More Lucrative Interest Rates: When you apply for a loan with a co-applicant, you stand to gain from more lucrative interest rates. When deciding the interest rate, the lender will factor in the total loan amount. The applicants’ income, and the CIBIL score.
  • Low Debt to Income Ratio: The Debt to Income ratio refers to the ratio of the total EMI to the total income per month. A higher Debt to Income ratio generally results in loans being denied. However, with a co-applicant, given that the total income goes up. The Debt to Income ratio falls, ensuring that the loan gets sanctioned.
  • Higher Chances of Loan Eligibility: When you apply for a loan with a co-applicant, the lender will consider the joint income and the applicant’s CIBIL scores. This ensures a higher probability of the loan being sanctioned.

Co-Applicant’s Responsibilities

If you apply for instant personal loan, and you are the co-applicant, you must be mindful of the following responsibilities you have:

  • If the other applicant is unable to repay the loan owing to unforeseen circumstances, the onus of repaying the loan falls on you.
  • Lenders check the CIBIL score of the applicant as well as the co-applicant, apart from other factors, before sanctioning the loan. Thus, it is vital for the co-applicant to also have an excellent CIBIL score.
  • When you apply for a joint loan, it is showcased in the credit history and CIBIL score of both the applicants. Failure to repay the loan will reflect poorly in both the applicant’s credit report.
  • If you default on the repayment of the loan, the lenders can approach either party to claim payment. Thus, the onus to pay the same falls on the co-applicant as well.

Essential Points to Remember When Using a Co-Applicant

When you apply for an instant personal loan with a co-applicant, you must note the following:

  • When applying for a joint loan, the lender will verify both borrowers’ IT returns, bank statements, KYC documents, and employment certificates.
  • A joint personal loan is only sanctioned by some lenders. Before applying, you must check with your lender if they offer the same.
  • Generally, the application process for a loan with a co-applicant takes a tad bit longer to process.

When Must You Not Use a Co-Applicant

You must not apply for an instant personal loan application with a co-applicant. When their Debt to Income ratio is similar to yours or higher. Even if you as a primary borrower are eligible for a loan, if your co-applicant has a poor Debt to Income ratio. Your chances of securing a loan will be diminished.



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