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Is your Credit Score >750?
Get answers to commonly asked questions related to the credit score and credit reports
Owning a home ranks high on the aspiration list of Indians. It is considered as a mark of social status and security as well. In line with the need for more and more houses, the real estate prices in the country have seen a massive uptrend over the past few years. This has made owning a home a very costly proposition, which might be difficult without the aid of a home loan for most of the individuals.
A home loan is a big-ticket and long-term loan. Hence, the lenders follow stringent eligibility criteria to ensure that there are no defaults on the loan. They are very particular about the income, employment status, length of employment with the current employer, residential status, existing loans, and your credit score.
Among all other factors, your credit score assumes a huge role in deciding the approval of a home loan. A credit score is an indicator of the past creditworthiness of an individual. It is a three-digit number in the range of 300-900 and is assigned based on the credit behavior of an individual in the past. Higher numbers on the range indicate better levels of creditworthiness.
An applicant with a low credit score does not evoke much confidence in the lender about prompt repayment of the loan. This is especially true of a home loan, as loan amounts and tenures involved are bigger and longer. Therefore, only high credit score of 750 has become a mandatory requirement for those applying for a home loan.
Additional Reading: How bad is your credit score?
In a normal scenario, a lender takes a risk by lending to the borrower and the borrower compensates the risk by paying an interest on the sum borrowed.
When an individual has a low credit score, the lender has to assume a higher risk in lending to that individual. The higher risk involved in lending can get manifested in a number of ways as below.
A low credit score can often lead to a complete rejection of a home loan application. If a low credit score is also coupled with low income or higher levels of debt, it makes for a sure shot case of loan rejection. Even when the other factors like employment and income are on satisfactory levels, a very low credit score like that in the below 500 level may result in a home loan rejection.
Even though a home loan may get rejected, it will still be counted as a Hard Inquiry against your PAN. So, this may bring your credit score further down. When you apply for a home loan with a low credit score, you may be in for a double whammy.
On the other hand, a good credit score may ensure that your loan application is approved at the earliest.
Therefore , it is advisable to check your score much before you decide to apply for a home loan, or for that matter, any loan. In fact, checking and improving your credit score should be done simultaneously with house hunting, so that by the time you finalise your home, your credit score could have improved as well.
If your credit score is somewhere in between 650-750, you may still earn an approval on your home loan rate, however the rates of interest will be higher than the ones that are offered to individuals with a credit score above 750.
Risk-based credit pricing in India is already evident. Several top-notch banks like SBI and others follow this methodology.
For Ex: For all home loans above Rs 30 lakhs, SBI has a risk-based grading system which takes into consideration factors such as credit score. The below given rates are only for salaried applicants.
For loans between Rs 30-Rs 75 lakhs
1 yr MLCR + 35bps
1yr MLCR + 45bps
1 yr MLCR + 40bps
1 yr MLCR + 50bps
Though the difference in the rates between risk grades may be small, it may prove to make a big difference in the amount of interest paid over the entire term of the loan.
The rate of interest charged and the tenure of the loan are the main determinants of a home loan EMI. Currently, home loan tenures can go up 30 years depending upon the age of the applicants. However, in the case of an applicant who has a lower credit score, the lender may not want to take the risk of lending for a longer term and hence, may approve the loan for a shorter tenure. Or the lenders may lower the Loan to Value Ratio and ask the applicant to bring in a higher down payment amount.
Both these cases, a shorter tenure or a higher down payment, could in-turn translate to a higher financial burden on the applicant.
Your credit score, whether good or bad can have far reaching consequences on a home loan. Therefore, it is good to ensure that you have a good credit score before applying for any loan.
A CIBIL™ score is a three digit number between 300 and 900 that gives potential lenders a quick idea of your loan
Credit repair involves rebuilding your credit health to a level where you become eligible for loans.
A CIBIL™ Score is an indicator of an individual’s credit worthiness. It impacts the individual’s ability to borrow
A credit report is a history of your credit behaviour and contains detailed information on all your loan and credit
A credit rating - also known as a credit score - is a 3 digit number between 300-900 that gives potential lenders
A bad credit score is generally one that is less than 650. A credit score is a three digit number in the range of 300-900
Yes. In fact, a credit score of 850 is very good! Most lenders look for a minimum credit score of 750 to approve loans
There are several ways in which you can improve your credit score. Depending on how good or bad your score is,
Is 800 a good credit score? Yes. In fact, a credit score of 800 is very good! Only a small percentage of people reach,
Is it possible to obtain a free credit check or credit report? The answer is yes and no!
Your CIBIL™ Score plays an important role in getting loans and credit cards sanctioned, because it gives lenders
It is not possible for anyone, either lenders or borrowers, to get a CIBIL™ score or credit report for free.
It is important to know that there is no such thing as a CIBIL™ defaulter list. There used to be a defaulter list earlier,
There is really no number that can be established as the average credit score in India. Many people see regular
You can repair your credit absolutely free if you do it yourself! However, many people choose to get professional help
First, it is important to note that there is no ‘Defaulters List’ that is maintained or circulated by CIBIL™ or any of the other
Sourav and Ankit are watching the New York Marathon on TV and decide that they want to run a marathon.
In India, the best credit score to have is one that is 750 or above. The three credit rating agencies that operate in India
Is a credit score of 700 good? While it is not a very bad score, it is not good enough to automatically qualify
It is difficult to get a loan with a credit score of 650. Most banks look for a minimum score of 750 when deciding
It is not likely that you will get a loan with a credit score of 600. Most banks look for a minimum score of 750
It is difficult to get a loan with a credit score of 550. Most banks look for a minimum score of 750 when deciding
A poor CIBIL™ score can increase your financial problems and make it difficult to access credit, whether as a loan or credit.
One common worry that runs through your mind after you have made a credit card settlement is,
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