Know What CIBIL Score is Considered Good for a Home Loan

Once you have made a Home Loan application, one of the first things that your lender will do is connect with one of the credit bureaus in India and ask for your credit report or CIBIL score. Home Loan applicants must know that their credit score is a crucial determinant in deciding whether their Home Loan application will be accepted or rejected. A good score for Home Loans helps in significantly.   

What is CIBIL Score?

The CIBIL score is a three-digit number ranging between 300 and 900. The higher the CIBIL score, the better your chances of getting approved for a Home Loan.  

Credit agencies calculate an individual's CIBIL score after considering several factors, such as their past repayment behaviour, their credit history, their current debt-to-income ratio, etc. An individual's credit score essentially helps a lender decide the risk factor involved in lending money to the individual -- a good CIBIL score says that the individual is a responsible credit user and can be trusted with timely repayment of a loan. A bad CIBIL score says that the applicant is unreliable and cannot be trusted with loan repayment.  

Minimum CIBIL Score Required for Home Loans

If you are planning to avail of a Home Loan, make sure you have the credit score required for a Home Loan. What is a good credit score required for Home Loan? The answer is 750 plus. Individuals applying for a Home Loan fall under three different categories based on their CIBIL score:  

- Those with CIBIL Score above 750: If your credit score is above 750, your lender will see you as a completely risk-free borrower. A 750-plus score is a mark of a highly responsible credit user. If your CIBIL score is 750 and above, lenders will offer you their best loan deals along with lower Home Loan interest rates.   

- Those With CIBIL Score Between 625 and 750: If your CIBIL score falls within the bracket of 600 and 750, your preferred lender will see you as a low-risk borrower and so, though you will get approved for a Home Loan, the Home Loan interest rate offered to you will most likely be on the higher side.  

- Those with CIBIL Score under 625: Lastly, if your CIBIL score is under 625, it is very unlikely that you will get approved for a Home Loan.  

As a potential Home Loan applicant, you must now be wondering how to calculate CIBIL score for Home Loans? These days, everything happens online. There are many online websites that give you your credit score within seconds, based on the information provided by you. You can use one of these websites to check your CIBIL score.     

Additional Read: How to Check, Calculate, and Increase CIBIL Score? 

Now that we have some clarity on how lenders use the concept of CIBIL score to look into an applicant's profile and assess their creditworthiness, let us look at the benefits of having a good CIBIL score.   

Benefits of a High CIBIL Score

When it comes to Home Loans and the application process involved, there are several advantages of having a high CIBIL score. Some of the advantages are discussed below:  

• If your CIBIL score is excellent, i.e. 750 and above, the biggest benefit would be that you will easily get a Home Loan on low-interest rates and this will help you save a lot of money in the long run. 
• A good CIBIL score also gives a potential borrower better negotiating power over their lender. 
• A good CIBIL score ensures quick approval and also increases one's chances of getting a high-value loan.   
• Those whose credit score is above 750 often get pre-approved loan offers. When you have a pre-approved offer, applying for a loan and availing it becomes easy since the lender has already pre-approved you for a loan. 
• Lastly, with a good CIBIL score, it becomes possible for a borrower to get a loan for a longer tenor. This is a big advantage as a long tenor allows one to repay the loan comfortably and brings with it great peace of mind.  

These are some of the benefits you will experience if your credit report is good. However, what should a borrower do if their credit rating is not so good? Do not worry -- even those who do not have the credit score required for Home Loans can avail of good Home Loan deals. Read on to know how. 

Additional Read: A Helpful Guide to Understanding Your Credit Report 

What to do if Your Credit Score Does Not Meet the Minimum Eligibility Requirements?

Even if your CIBIL score is not as good as it should be, you can still get a Home Loan deal. Follow these Home Loan tips and tricks to get approved for a Home Loan with a low CIBIL score:    

• If your CIBIL score is low and you wish to get approved for a Home Loan, you must convince your lender that you are entirely capable of repaying the loan. One of the best ways to do this is to show good income. If your CIBIL score is low, add all extra income sources, such as rental income, interest payments, money earned from a part-time job, etc. to your loan application. This will convince your lender of your repayment capacity.
• You can also benefit from adding a co-applicant to your application. However, remember that this co-applicant must be someone with a good credit score and a decent monthly income.   
• If your credit score is low and you wish to get approved for a Home Loan quickly, consider applying for a Home Loan amount lower than what you had planned to apply for.   
• Make sure there are no errors in your credit report. If your credit score has gone down due to an error, get your report rectified immediately.   

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