What is the importance of a Credit Score while applying for a home loan?
Banks borrow money at a certain cost and lend at a certain price.
" Therefore, banks are basically traders of money. Banks look to lend money only to those who they feel have the capacity and have demonstrated the habit of repaying on time. Therefore, your credit score which is based on your previous credit record is an indicator of your repayment habit. Whether you are applying for a secured or an unsecured loan, this factor can never really be ignored. And yes, it will be extremely tough to get unsecured loans for some years (credit cards, personal loans etc.) if there is a history of poor repayment behaviour. Your credit score can be ignored to some extent in case of a secured loan where banks get some mortgage as security for the loan. This deviation will vary on a case to case to basis. If the discrepancy in you report was small, such as a small delay in payment, then the major ""A"" class bank or non-banking financial companies might consider your case. But if the discrepancy is big and payments for earlier loans were defaulted for a long time, or later settled intentionally, then chances of getting loans from a good bank will diminish rapidly. But, there may still be some banks and non-banking financial companies which may consider your case favourably. Chances becomes thinner if you have still not repaid them and repayments to your previous banks still show as pending and overdue in your CIBIL report. In such cases it gets almost impossible to get new loans..