Company category list versus Credit score- which matters more for a loan?

The availability of credit in the form of unsecured finance and mortgages from banks and NBFCs is changing the lifestyles of salaried individuals.

Individuals earning a high income no longer have to wait to own their own home or furnish it with the latest accessories; a home loan or a personal loan can easily provide the funding needed to repay it conveniently via monthly instalments. Credit cards enable instant payments for retail goods and fine dining. 

Lenders have, over the years, identified segments and behaviour patterns of individuals who use credit responsibly and repay dues on time. Primary factors include employment with organisations on the Bank’s approved company list and the individual’s previous credit usage. These factors will further influence eligibility for additional credit. 

You may have recently experienced a credit default. Will your company category help override this, or will a healthy credit history enable you to receive the funds you need? A detailed comparison of both these factors will help create a better understanding:

What is a company category list for loans?

To classify companies for lending purposes, banks have published their own approved lists of companies for loan and credit card sourcing. Companies on the list are stable, profitable, with high turnover and substantial assets. Banks issue their own company category list, such as:

• HDFC Bank Company Category List.
• ICICI Bank Approved List of Companies.
• AXIS Bank Company category list.

What is a credit score?

A credit score is a three-digit number that indicates an individual’s creditworthiness. Credit bureaus operating in India include:

• The Credit Bureau of India Ltd (CIBIL)
• Experian.
• Equifax
• CRIF High Mark

The Credit Bureau of India Ltd (CIBIL) score is used by most Banks to assess an individual’s credit usage. The score ranges from 300 points at the start to a maximum of 900 points. A score of 720 or above indicates a good repayment record and eligibility for credit.

What is the importance of the company category list?

Employment with an approved company signifies that the applicant has job stability and a regular income. 

• HDFC Bank classifies companies by their prominence as Super A, Category A, B, C, and D. Applicants employed by upper-tier companies are preferred candidates for an HDFC Bank personal loan issuance. 
• ICICI Bank categorises approved companies as Elite, Super prime, and Prime, with Elite companies in the top tier. Applicants from the listed companies are eligible for ICICI Bank’s lowest personal loan interest rate.
• AXIS Bank categorises companies as Category A, B, C, and D based on their turnover and risk profile. The approved list for an AXIS Bank personal loan includes Government undertakings and public and private limited companies. 

What is the relevance of the credit history?

Your credit history is the record of the loans and credit cards allotted to you and the repayment details. Credit bureaus like CIBIL will assimilate and reflect the following in your credit history:

• The number of times you have applied for credit to various lenders.
• Your existing credit lines and their repayment track.
• Previous Loans and credit cards you have successfully repaid and closed.
• Credit lines with pending payments.
• Loans or credit cards that have been settled.

Based on your credit history, CIBIL will allot you a credit score. Most banks require a credit score of 720 or higher to qualify for a personal loan. Your credit score and history will determine your eligibility for an unsecured personal loan, a credit card, or a mortgage. 

If there are any delinquencies or delays in your CIBIL history, or your CIBIL score is 

How to check company category for loan?

Leading Banks such as HDFC Bank, ICICI Bank, and AXIS Bank will process a personal loan request if your company is included on the Bank’s approved company category list. 

Before applying, it is advisable to check whether your company is on the approved list of banks to avoid delays. Applicants can check the company category online on the Bank website before submitting documents, or forward your query to us at www.yourloanadvisors.com.

How to check your CIBIL score?

• A self-check for your CIBIL score is advisable before you apply for credit.
• You can check your CIBIL report by submitting a request on the CIBIL official website and filling in the form.
• Make sure your CIBIL score is above the required benchmark before submitting your application, as a CIBIL check by the Bank will lower your score by 10 to 15 points.
• In case your CIBIL score is below the required benchmark, apply to a lender that will issue you a loan based on an existing relationship.
• Apply to an NDFC that accepts a lower CIBIL score, but will issue a personal loan at a higher interest rate.
• Review the details in your report. If a transaction has not been updated, you can contact the lender to rectify it.
• Any outstanding dues must be paid. If the credit ratio is high, consolidate your loans and credit card debt with a personal loan balance transfer.

Apply for a personal loan after using the Personal loan eligibility calculator to check the amount you are eligible to get.

What are the advantages of a company category list?

The HDFC Bank company category list, the ICICI Bank company category list and the Axis Bank Approved List of Companies are exhaustive lists of companies approved to source unsecured loans and credit cards.

 You should check if your company is approved before applying for a personal loan. If your company appears on the approved list, the Bank has confidence that you have stable employment and can pay your dues on time. Loan applicants benefit as follows:

• Applicants can apply for an online personal loan and credit card, or give hard copies of documents.
• Applications are processed with speed to disburse the loan amount to the applicant’s account within the specified time frame.
• HDFC Bank and ICICI Bank offer personal loans to applicants without a CIBIL score if their employers are on the approved company list. 
• Loan amounts are offered with an increased multiplier based on the salary drawn and the company’s category.

• Lowest interest rates are offered to upper-tier companies listed as Category A and in the super prime category of the ICICI Bank company category list.
• Customers employed at the top companies are allotted a maximum loan tenure of 72 months. 

What are the benefits of the CIBIL score?

Your CIBIL score reflects your credit management and plays a crucial role in the processing of a loan request. CIBIL assigns scores from 300 to 900 based on your credit usage. When you apply for credit, the lender will first review your credit score and history. 

• A high CIBIL score gives the lender confidence that the loan amount will be repaid on time, particularly when issuing unsecured credit, such as a personal loan or a credit card.
• A CIBIL score of 720+ indicates judicious use of credit, timely repayment of EMI and credit card dues and is the benchmark required by most Banks.
• With a good CIBIL score, your loan application is approved by most Banks for further processing.
• The lowest interest rate is offered to applicants with a credit history of successful loan repayment and no outstanding credit card debt.
• The lender will take into account your CIBIL score and current credit dues when granting you the loan amount required.

Can you get a loan without a credit history?

Cashless spending has become the norm; payments are made digitally or via credit or debit cards. Building a CIBIL score is now mandatory. With a bank-issued credit or debit card, purchases can be made on EMI, helping to develop a CIBIL score. 

It takes 12 months of regular credit usage for CIBIL to issue a credit score. If you are new to credit or do not have the required length of credit history, you are eligible for a personal loan from;

• HDFC Bank
• ICICI Bank
• YES Bank.

Which Bank will provide a loan to non-listed company applicants?

If you are employed with a company that does not feature in the personal loan company category list of any Bank, you have the following options:

• YES Bank provides personal loans to applicants from non-listed companies who meet the YES Bank eligibility criteria.
• Employees of non-listed companies with a salary of ₹ 1 lakh and above can apply for an ICICI Bank personal loan.
• NBFCs, including SMFG Finance Private Ltd, TATA Capital, and INDUSIND, provide personal loans to employees of non-listed companies.

In conclusion, your company profile and CIBIL score are the two primary variables lenders consider when issuing a personal loan. Although all salaried employees look forward to working with a listed company, changing employers may not be easy if a non-listed company employs you. 

Whereas regular credit usage and timely repayments are achievable. Make sure to build a strong credit profile so you meet the personal loan eligibility criteria for an instant personal loan.