CIBIL Score for Home Loan

CIBIL score for home loan

If you want to apply for a loan and avoid the prospect of rejection, then you need to know the importance of a CIBIL score in the loan-approval process.

What is a good CIBIL score?

A CIBIL score ranges from 300-900. A good CIBIL Score to qualify for a home loan is 700 and above. The closer you are towards 900 the better chance you have of being approved for a loan. Moreover, a higher credit score means that you can avail of more attractive offers including lower interest rates, larger loan amounts, simpler documentation, and longer repayment periods.  You can get up to 80% of the total cost of the property.

Why is a CIBIL score important when applying for a HOME LOAN?

If you want to apply for a loan and avoid the prospect of rejection, then you need to know the importance of a CIBIL score in the loan-approval process.  

The first thing a lender checks when you are applying for a loan is your CREDIT Score. If you have a low credit score, there is a good chance the lender will reject your loan application? However, if you have a good CREDIT score (above 700), then the lender looks into the application further to check the credit worthiness of the borrower before making a final lending decision. Your credit score gives lenders a quick impression of your probability of default based on your past repayment behaviour.

If you have a low CIBIL Score how can you improve it?

• Never make any late or missed payments.

• Keep a balance between secured and unsecured loans.

• Keep an eye on your Credit Report and check your credit score on a regular basis.

• Do not apply for too many loans at the same time. • Do not use more than 50% of your credit limit.

How do lenders make use of my Credit Score?

Earlier, lenders needed to make a partly-subjective internal assessment and do background checks in order to sanction a loan. But now with the help of a Credit Score and a Credit Report, it has become very easy for the lender to access accurate, data-based credit information on the applicant.

• CIBIL has a database of the credit related activity of customers. This is used to calculate their individual credit score.

• If you have a low score, (less than 700) lenders might see you as a high risk customer with history of defaulting on payments and might be unwilling to approve your loan application.

• If you have a high score, lenders see you as a low-risk customer with low probability of default and will be willing to lend to you with attractive terms.

• While there is no fixed minimum CIBIL score to apply for a card, it is recommended that you ensure that you have a score of at least 700 before you apply for a home loan.

If you are planning to apply for a loan and want to improve your score, a professional credit management company like CreditMantri can help guide you on how to build your credit profile and become loan-eligible.  Improving your credit score and becoming loan-eligible will allow you fast and hassle-free access to credit in the future as well.

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