Home Loan Eligibility: What you Need to Know About your CIBIL Score?

When you apply for any type of loan, banks examine your cibil score . This is basically a rating given by The Credit Information Bureau (India) Ltd popularly known as CIBIL score. The score is in the form of a three-digit number, which is created by sourcing detailed credit data from the banks. Based on the data, the bureau offers scores and reports for individuals.The three-digit rating ranges from 300 to 900, with 30 being the lowest score. The score is a summary of credit history that is calculated based on factors such as tracking past payments, previous settlements/defaults/write offs, secured loan vs unsecured loan, credit cards, loan equities and so on.check my home loan eligibility

The bureau updates CIBIL score every 30-45 days once they receive data from credit institutions. If you face any dispute with your bank, due to which your CIBIL score is not updated. You can get in touch with the bureau and ask to update the information. The agency takes around 30 working days to close your request.

The bureau has set its own parameters to calculate a score for each individual. Below are some of the factors it considers that influence a person’s CIBIL score:

• Default on loan repayment: The bureau closely observes delay in paying EMIs. Delays in repayment reduce your CIBIL score.
• Type of loan: CIBIL reviews what type of loan you mostly prefer – unsecured or secured. It will tag you as a risky borrower if your instances of borrowing unsecured loan (personal loan or credit card loan) are high. It impacts your score negatively.
• Loan Duration: Suppose you have taken a loan for long duration and the bureau notices that there is timely repayment of the loan, then it turns out to be favourable for your CIBIL score.
• The number of inquiries: If you tend to raise too many requests or loan inquiries with different financial institutions and banks, the prospective lender makes an inquiry on your CIBIL report. Too many requests for loan application creates a bad impression and negates your score.

Borrowers often have this question “how do I check my home loan eligibility CIBIL score is the best way to ascertain this. When you apply for a home loan, banks will ways refer to your credit score first. You need to have decent credit, ideally between 650-750.Most banks approve your home loan if you have a minimum credit score of 720. If you have a credit score below 650, you may be less likely to get a higher loan amount. Hence, you must ensure that you maintain a score of at least 650-750 to get a home loan at a lower interest rate.

• Make timely repayment of loans.
• Keep your credit utilization ratio at 30% for a good score
• Ensure a balance of the unsecured and secured loan

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.