A credit score plays a crucial role in determining eligibility for a home loan. It is one of the essential factors that lenders consider for loan approval. It helps in assessing creditworthiness, boosting the chances of loan approval. Therefore, credit score calculation becomes necessary when applying for a home loan.
What is the minimum CIBIL score for a home loan?
The minimum CIBIL score for a home loan generally ranges from 650 to 700, whereas a credit score of above 750 is considered excellent and a score of below 600 may lead to the rejection of the loan.
Even though the minimum CIBIL score for a home loan can vary from one lender to the other, it is desirable to aim for a high credit score to avoid disputes. Therefore, borrowers should be mindful of maintaining a cibil score for home loan to reduce the risks of rejections in home loan applications.
How can a CIBIL score affect home loan eligibility?
A healthy credit history helps in convincing lenders for loan approval. Even though borrowers with low credit scores can also apply for a home loan, they can be at risk of rejection. Borrowers with lower credit scores may have to settle for a lower amount as principal with only 40% of their asset’s value.
On the other hand, a good CIBIL score makes the borrowers eligible for a home loan since it reflects their creditworthiness to the lender. Such borrowers can get the desired value of their asset with a higher principal amount at favorable terms. Hence, a credit score is one such crucial aspect that can affect one’s home loan eligibility.
How to increase the CIBIL score?
The following are the points individuals can follow to improve CIBIL scores:
Paying Monthly Installments On Time
Paying EMI within the stipulated time creates a positive impact on the credit score. It reflects the borrower’s ability to repay debts on time, boosting their CIBIL score. However, with each number of days delayed to pay the EMI, the credit score has the potential to drop.
Clearing all the Existing Debts
Existing debts create obligations in establishing a borrower’s creditworthiness, increasing the risks of rejection of the home loan application. So, it is highly recommended to avoid such circumstances by repaying all the debts on time or making prepayments, if possible.
Maintaining older Credit Cards to Lengthen Credit History
A long and healthy credit history makes it easier for lenders to assess one’s creditworthiness. Hence, they tend to allow lower rates of interest for borrowers with long and solid credit histories. So borrowers must maintain their credit cards for longer periods, paying their debts on time.
How to check the CIBIL Score Online?
Individuals can calculate CIBIL score online, and they can also access their credit reports. The following are the steps involved:
Step 1: Visit the official website of CIBIL.
Step 2: Click the “Get your CIBIL score” option.
Step 3: Type in the required details such as name, email ID, Aadhaar number, password etc.
Step 4: Select “Accept and continue”.
Step 5: Individuals will receive an OTP. Type in the OTP and click “Continue”.
Step 6: Click on the “Go to the dashboard” option.
Step 7: Once individuals are redirected to the website they can click the “Member Login” option to check CIBIL score online.
Borrowers can get pre-approved loan offers that several lending institutions provide based on their credibility, for loans like loans against property, home loans etc. They can check those pre-approved offers on their lender’s website by entering their names and other essential details. Availing these offers helps them get quick approval for their loan application.
Therefore, aspiring homeowners must remember the significance of their credit score calculation for a home loan. Keeping track of their credits, paying EMIs on time etc. can help them earn a good credit score, which can further them in their financial planning.
