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 key determinant in deciding whether their Home Loan application will be accepted or rejected. A good CIBIL score for a Home Loan helps significantly.
What is a 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, and their current debt-to-income ratio. An individual's credit score essentially helps a lender decide the risk factor involved in lending money to the individual. A high CIBIL score says that the individual is a responsible credit user and can be trusted with the timely repayment of a loan. A low CIBIL score says that the applicant may not be trusted with loan repayment.
Good Credit Score for a Home Loan
If you are planning to avail of a Home Loan, make sure you have the minimum credit score required for a Home Loan. What is a good credit score required for a Home Loan? The answer is 750 plus. A CIBIL score can be categorised as follows:
- CIBIL Score Above 750: If your credit score is above 750, your lender can see you as a 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 low Home Loan interest rates.
- CIBIL Score Between 625 and 750: If your CIBIL score falls within the bracket of 600 and 750, your lender may approve the Home Loan, however, they may offer a higher Home Loan interest rate.
- CIBIL Score Under 625: Lastly, if your CIBIL score is under 625, you may not get approved for a Home Loan. However, you can add a financial co-applicant with a high CIBIL score to increase your chances of availing of a loan.
As a potential Home Loan applicant, you may 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 search for them online to check your CIBIL score.
Read Also: Know How to Check Cibil Score by Pan Card
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 can get a Home Loan at low interest rates and this can help you save on the total interest outgo.
- A good CIBIL score also gives a potential borrower better negotiating power with their lender.
- A good CIBIL score ensures quick approval and also increases the chances of getting a sizeable loan basis eligibility.
- Those whose credit score is above 750 can get pre-approved loan offers. When you have a pre-approved offer, applying for a loan and availing of it becomes easy since the lender has already pre-approved you for a loan.
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? Borrowers who do not have the credit score required for Home Loans can avail of good Home Loan deals by following some tips. 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 to get approved for a Home Loan:
- 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 can convince your lender of your repayment capacity.
- You can benefit from adding a financial co-applicant to your application. However, remember that this co-applicant must be someone with a good credit score and a decent monthly income.
- 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.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
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