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Key Highlights
- CIBIL score for home loan is allocated to individuals and is a way to ascertain their ability to repay the loan amount they borrow.
- CIBIL score is determined by analysing the borrower's past record of borrowing and repaying, as shared by banks and lenders.
- If you have a higher credit score, the chances of your loan approval will be higher. You can also expect quick processing of your home loan application if you have a good CIBIL score for home loan.
What is a CIBIL Score?
CIBIL score is a three-digit number assigned to you by the Credit Information Bureau (India) Limited, which is a credit rating agency authorised by the Reserve Bank of India.A CIBIL score for home loan is allocated to individuals and is a way to ascertain their ability to repay the loan amount they borrow. The CIBIL score is determined by analysing the borrower's past record of borrowing and repaying, as shared by banks and lenders.
Importance of CIBIL Score for Home Loan
Your CIBIL score is taken into account by banks and financial institutions before disbursing loans and issuing credit cards. This is because CIBIL determines your creditworthiness. Your score could range from 300 to 900 based on your credit history.While a good CIBIL score makes it relatively easier for you to get a credit card or loan, a lower CIBIL scorecan be a hindrance if you are urgently seeking credit. Hence, maintaining a good credit score can help you in getting loans approved at relatively lower interest rates.
How to Improve Your CIBIL Score for Home Loan?
If you have a poor CIBIL score for home loan and want to improve it, then you have to be consistent in following the below-mentioned tips:
Set Reminders to Repay Your EMIs on Time
If you miss out on making your loan EMI (equated monthly instalment) payments on the due date, your credit score will fall. If you do not want your credit score to be impacted negatively, you should be punctual in paying off your EMIs and credit card dues.The best ways to avoid payment delays are by setting reminders to repay on time. You can also avoid delays by adding Standing Instructions (SI) to your bank account from where a fixed amount shall be deducted at regular intervals (usually monthly).
Clear Credit Cards Dues on Time
Your CIBIL score for home loan can be impacted significantly in case of non-payment of dues, and regular defaults can push your credit score below 600.You should plan to clear your credit card balances by the due date. If you are unable to do so, you must try to clear the minimum amount due. This is an important step that you must follow so that the card provider does not report the non-payment of total dues to the bureau, and your CIBIL score remains unaffected.
Maintain a Healthy Credit Mix
It is advisable to maintain an appropriate combination of secured loans (home loans and gold loans ) and unsecured loans (personal loans and credit cards) to build a good CIBIL score for home loan. This is because a higher number of unsecured loans may impact your creditworthiness negatively.
Try to Avail Secured Credit Card
To rebuild your creditworthiness before applying for a credit card, you can choose a secured credit card against a fixed deposit. In this case, the lender will not consider your CIBIL score while approving the secured credit card application, so it will be issued easily.Once issued, you can start clearing dues on time and rebuild your credit score. This can be helpful in the long run. Also Read: Home Loan Eligibility: What You Need To Know About your CIBIL Score?
Monitor Your Co-signed, Guaranteed, or Joint Loan Accounts Regularly
If a borrower does not meet the loan eligibility criteria, the lender may ask him or her to get it co-signed or guaranteed by a co-applicant. This is done to ensure that if the borrower fails to repay the loan, the remaining amount can be recovered from the guarantor.In co-signed, guaranteed, or jointly held accounts, all the signatories are held equally liable for missed payments. Your joint account holder’s inability to repay on time could affect your creditworthiness and CIBIL score for home loan.
Why Should You Have a Good CIBIL Score for Home Loan?
If you have a higher credit score, the chances of your loan approval are higher. This assures a lender of your ability to repay loans on time. You can also expect quick processing of your home loan application if you have a good CIBIL score for home loan.Ensuring at least a minimum CIBIL score for home loan also enhances your loan eligibility and enables you to avail larger loan amount when you require. A healthy credit score also gives you negotiation power to pay a relatively lower interest ratesand get the processing fees waived off.So, go ahead and follow the tips and guidelines mentioned in this blog to improve your credit score and apply for the financing you need without hassle.
FAQS - FREQUENTLY ASKED QUESTIONS
What is meant by CIBIL score for home loan?
CIBIL score is a three-digit number assigned to you by the Credit Information Bureau (India) Limited. CIBIL score for home loan is allocated to individuals and is a way to ascertain your ability to repay loans.
How to have a CIBIL score check for home loan?
The minimum CIBIL score requirement specified for a home loan can vary among lenders. A score of 750 and above is preferred by most lenders as a minimum CIBIL score for home loan applications.
How can I avoid delays in repayments to maintain my CIBIL score check for home loan?
To maintain your CIBIL score check for home loan, you should avoid payment delays. To do so, you can set reminders to repay on time or add standing instructions to your bank account from where a fixed amount shall be deducted at regular intervals.
What are the benefits of CIBIL score?
Benefits of CIBIL score include: better chances of loan approval, better loan eligibility, and being able to avail of a higher loan amount.
What is the minimum CIBIL score for housing loan?
There is no specific minimum CIBIL score for housing loan. However, a score of 750 and above is preferred by lenders for housing loan applications.
How to get a personal loan with a low CIBIL score?
You can reach out to various banks and financial institutions that are willing to provide a personal loan with a low CIBIL score. However, you must remember that you may have to pay a higher interest rate in such cases.
What is a CBIL report?
A CIBIL report is a credit report that includes your credit history, personal information, contact information, and loan account details. Lenders take into account both the CIBIL report and minimum CIBIL score for home loan to decide your eligibility for a loan.
Can applying for loans frequently impact my CIBIL score for home loan?
Yes, too much debt can affect your CIBIL score for home loan negatively.
Are CIBIL score and home loan interest rate related?
yes, there is a correlation between CIBIL score and home loan interest rate. If you have a good CIBIL score, you can negotiate with the lender to pay a relatively lower interest rate.
What is CIBIL score for home loan eligibility?
To fulfil CIBIL score for home loan eligibility, you should have a CIBIL score of 750 and above.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
