CIBIL Bureau is one of the authorized credit bureaus in India which calculate your credit score, and the other bureaus are Experian, CRIF High Mark and Experian. CIBIL score ranges anywhere between 300 and 900. An ideal CIBIL score for availing a home loan approval is usually 750 and above. The closer you are to 900, the higher your chances of getting approval for a home loan. Moreover, a higher credit score means that you can get more attractive offers involving lower rates of interest, bigger loan amounts, longer repayment periods and simpler documentation. You can get up to 80 per cent of your overall property cost as a home loan.
Let’s understand how you can obtain the minimum CIBIL score for a home loan –
Why is CIBIL score crucial when placing an application for a home loan?
In case you want to place an application for a home loan and avoid any rejection, then you require to know the importance of the CIBIL score in your loan approval process. The initial thing that a lender assesses when you place an application for a loan is your CIBIL score. If you have a low score, then there is a good amount of chance that the lender will turn down your application for a home loan. However, if you hold a strong minimum CIBIL score for home loan of at least 750, then lenders may look at your application as good and might make a positive decision. Your credit score endows lenders with an instant impression of your chances of default depending upon your previous repayment history or behaviour.
How can you improve your low CIBIL score?
Here are a few of the crucial tips which can assist you in ameliorating your low CIBIL score –
∙ Never make any missed or late payments
∙ Always repay your credit card bills and other loan dues in full and on time
∙ Keep a balanced mix between your unsecured and secured loans
∙ Ensure to keep a thorough watch on the credit report and check up on your score regularly
∙ Do not place the application for a lot of loans in a small-time frame
∙ Avoid using over 30 per cent of your credit card limit.
How do the lenders look at your credit score?
Previously, lenders were required to conduct a partly subjective evaluation and do a background check before sanctioning the loan. But now, with the assistance of credit reports and credit scores, it has become simpler for lenders to access the right, accurate, data-based credit info about the applicant. CIBIL bureau holds the database for all the customers who are involved in credit-linked activities. With this data, the bureau computes your credit score easily.
If you hold a low credit score of below 750, lenders may see you as a high-risk individual with a history of defaults on payments and may not be willing to approve your application for a loan. In case you have a high credit score, lenders may view you as a low-risk applicant with low chances of default and may be willing to lend you a home loan at attractive terms and conditions.
While there are zero fixed minimal CIBIL scores to apply for a loan, it is suggested that you make sure that you hold a credit score of at least 750 and above before you place the application for a home loan. Many suggest you at least check free CIBIL score once through online lending marketplaces or the CIBIL bureau’s site to get an idea of where you stand on the stance of credit score and eligibility for a home loan. If your credit score is 750 and above and you see no discrepancies or issues in details mentioned on the credit report, then it is a good sign, which means you can proceed with your home loan application. In case it is not, then you must first improve your score, make corrections in the case of any discrepancy, and then apply for a home loan with a rectified credit score.
A strong credit score is necessary for home loan approval, particularly if you want to avail a lower rate of interest. Banks might either turn down your home loan application or lend you at a higher rate of interest if you have a poor credit score. Thus, always make sure to hold a strong credit score to get home loans easily and make your important dream of becoming a homeowner come true.
Requirement for strong credit score for a home loan – FAQs
What is a strong credit score for a home loan?
A strong credit score for a home loan must be 750 and above. A lower credit score will either lead to rejection of your application, or you might require paying a higher rate of interest.
Can you get a home loan if your credit score is below 750?
A strong credit score must be 750 and above. A lower credit score necessarily does not result in home loan rejection. However, if you hold a lower score, there is a high chance that you may get approval for your home loan at a higher interest rate, which would automatically enhance your overall loan cost. A higher interest rate on a home loan is charged by lenders to compensate for the involvement of higher credit risk.
Can you get a home loan if your credit score is at 690?
While it is possible to avail a home loan if your score is 690, ensure to at least try and reach a 750 margin. This is because applying with a score of 690, as mentioned above, may propel you to pay a substantial rate of interest.
How can you check your credit score?
To check your credit score, you can approach any online lending financial marketplace. Such marketplaces provide you with a details credit report on a monthly basis for free. By reviewing your credit report, you can better understand your chances of securing a home loan. If your score is good, you hold a higher chance of availing of a home loan. Otherwise, you may face rejection or acceptance at a higher interest rate.