A loan is usually taken into meet for the immediate financial requirements. Most banks, NBFC and financial institutions, look at an individual’s CIBIL/ Credit score which further plays a vital role in the acceptance or rejection of his/her home loan application.

What is CIBIL/ Credit score?

CIBIL, is the first impression of the applicant in front of the lender. It is a three digit number which is calculated based on the financial history of the applicant. CIBIL score ranges from 300 – 900, with people having a higher score, more eligible to get a home loan.

Usually, a credit score in the range of 650 to 850 is considered good by the banks and will help you get a swift home loan approval. However, some lenders also offer loans to individuals in the bracket of 550-650. Anything lower than 550, will strongly curtail your chances of getting an approval.

Factors determining CIBIL score

  • Payment history
  • Types of credit and loan accounts
  • Guarantors of loan
  • Credit history
  • Opening and outstanding loan amount

Advantages of CIBIL score

Easy credit from lenders:

a good score, helps in getting loans and credits from lenders easily, as it exudes confidence about your ability to repay the loan in a timely manner

Quick approval of loans:

a good score states that you are a good prospect to lend money to, hence the approvals are also faster

Low interest rate credits:

a good credit score can earn you lower interest rates, which will help to reduce the chunk of EMI that you need to pay, thereby lessening the financial burden.

More negotiation authority:

with a good score you get a loan easily, whilst improving the prospect of negotiating for lower rate of interest.

Higher approval limits:

a good score, improves your chances of a loan approval at a low rate of interest, and higher sanctioned loan amount

Easy approval for leased/rented properties:

can get easy loan approval even for rented or leased properties like homes, commercial complexes, apartments on a good score

Credit card offers:

if you have a good credit score, then the bank offers exciting and better offers, with higher limits, cashbacks and more privileges

It is worthy to note that, there are exceptions wherein a bank may offer you a home loan based on a good credit score, even if you are falling behind in age or income. This is something which varies from one institution to the other. Hence, make sure to have a healthy credit score before you apply for a home loan.

Learn more about your home loan eligibility here.

DISCLAIMER

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.



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