Equifax, Experian, and CRIF High Mark are the other three recognized credit bureaus in India that give credit scores.
A CIBIL score varies between 300 and 900. A CIBIL Score of 700 or above is required for a house loan. The closer you are to 900, the more likely you are to get accepted for a loan.
The minimum CIBIL score necessary to obtain a loan varies depending on the kind of loan.
There is no minimum CIBIL score for house loan approval, however, 750 and above is typically regarded as a good one.
This post will teach you how much cibil score is required for a home loan.
What is Credit Score?
A credit score is a numerical expression that represents an individual’s creditworthiness based on a level study of their credit files. Your credit score is generally determined by a credit report, which is normally obtained from credit agencies.
This score is calculated using information from the CIBIL Report’s ‘Accounts’ and ‘Enquiries’ sections, which include (but are not limited to) loan accounts or credit cards, payment statuses, outstanding amounts, and days over the due date. With a range of 300 to 900, the closer a CIBIL Score is to 900, the more likely the consumer’s credit card or loan application would be granted.
How your CIBIL Score affects your loan eligibility
Implications of CIBIL Score: Having a good score of 700 or higher expedites the loan procedure and qualifies you for a larger loan amount and a better rate of interest from a wider selection of lenders. The loan is completed quickly, and the loan amount is deposited into your account. The higher your credit score, the more likely you are to get approved for a house loan with a larger loan amount and a cheaper interest rate.
Calculates the interest rate on a house loan: You will be in a position to negotiate lower interest rates with lenders if you have a strong CIBIL score. Furthermore, a greater number of lenders would be interested in granting you a house loan with a strong credit history, allowing you to select the best price. A poor score, on the other hand, not only diminishes your chances of getting approved for a house loan but also eliminates your ability to negotiate the loan amount and interest rate. In reality, it leaves you with little alternative but to accept the lender’s low loan amount and exorbitant interest rate.
Helps determine the house loan amount: Your strong score allows you to be eligible for a larger loan amount for the same reason that you can command a lower interest rate, which you would not be able to do if you’ve had a poor score. In fact, lenders will offer you a lesser loan amount than typical if you have a poor credit score.
How to Boost Your CIBIL Score for Home Loan
Maintain a Low Credit Utilization Ratio: You may always ask your bank to extend the limit on your credit card, which will assist you in maintaining a low credit utilization ratio and subsequently improving your credit score. You should also keep track of your credit consumption in order to use as little credit as feasible. Lower credit use over long periods will demonstrate that you are capable of handling additional credit, making it easier to obtain home loan approval.
Keep a Healthy Credit Balance: It is recommended that you maintain a healthy credit mix in order to increase your CIBIL Score for a house loan. This includes having the proper blend of secured and unsecured loans. Having too many unsecured loans will harm your CIBIL Score.
Monitor your Credit Report Regularly: Keeping constant track of your credit report is one of the simplest methods to boost your CIBIL Score since it eliminates the possibility of any wrong information being recorded in the report pertaining to your payments, EMIs, and more.
Maintain Your Old Credit Accounts: You must not cancel your old accounts since the lenders will know your repayment capability and how smartly you managed your credits in the past and paid them on time.
How to Improve CIBIL Score
Here are some crucial pointers to help you improve your CIBIL score:
- Make no late or missing payments.
- Always pay your credit card payments on time and in full.
- Maintain a healthy balance of secured and unsecured loans.
- Keep an eye on your credit report and credit score on a frequent basis.
- Do not apply for too many loans at once.
How to Improve Your Home Loan Eligibility
- Unless you are concerned that you will forget to pay your bills, set up an auto-debit. This gives your lender the authority to deduct the monthly loan from your account on a set day each month. Remember to have the required amount in your account on the pre-determined date to avoid being charged a high-interest rate owing to an unsuccessful auto-debit transaction.
- If you do have an ongoing loan, pay the dues on time each month to increase your credit score and establish a positive credit history for prospective lenders.
- Ensure you properly study the loan contract and clear any concerns before signing on the dotted line to avoid being caught off guard in the future.
- Prevent financial practices that pose a risk to your credit history, such as accepting cash advances on your credit cards. This informs lenders that you are experiencing financial difficulties.
- Before applying for a loan, review your credit report to ensure there are no inaccuracies or omissions of transactions. If you discover mistakes or fraud, file a CIBIL challenge before applying for a house loan.